Crest Products expects the following sales of its single product: UnitsAugust25,000September24,000October22,000November20,000December17,500Crest desires an ending finished goods inventory to be equal to 30% of the next month's sales needs. August 1 inventory is projected to be 7,800 units. Each finished unit requires 2 units of component X and 11 units of component Z. August 1 materials inventory includes 5,000 units of component X and 184,000 units of component Z. Crest desires to maintain a component X inventory equal to 10% of next month's production needs and a component Z inventory equal to 70% of next month's production needs.a. Prepare a production budget for Crest for as many months as is possible.b. Prepare a direct materials purchases budget for both Component X and Component
Z for the months of August through October.
What will be an ideal response?
Budgeted production units = Budgeted unit sales + Budgeted ending finished goods inventory - Budgeted beginning finished goods inventory. Budgeted direct materials purchases = Materials needed for budgeted production needs + Budgeted ending direct materials inventory - Budgeted beginning direct materials inventory.
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