Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 39

Production and Materials Budgets—Process Costing Uecker Company budgets on an annual basis. The planned beginning and ending inventory levels (in units) for the fiscal year of July 1, 2010, through June 30, 2011, for one of its products, XPL30, are as follows:

	July 1, 2010	June 30, 2011
Raw materials	40,000	50,000
Work in process	10,000	20,000
Finished goods	80,000	50,000

Two units of raw materials are needed to complete one unit of finished product. All materials are added at the beginning of production. The firm completes all work-in-process before starting a new batch and plans to sell 480,000 units during the 2010-2011 fiscal year.

Required

1. How many units of XPL30 must Uecker Company complete in fiscal 2010?

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2. How many units of XPL30 must Uecker Company start into production during the 2010-2011 fiscal year?

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3. How many units of raw materials must Uecker Company purchase during the 2010-2011 fiscal year?

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4. In general, how would your answer change if the company adds all require materials immediately before completion of the manufacturing process for XPL30?

Step 1 of 5

1.

Schedule of Budgeted Production

Thus, Uecker Company must complete 450,000 units in fiscal 2010 of XPL30.