Lens Junction sells lenses for $44 each and is estimating sales of 16,000 units in January and 17,000 in February. Each lens consists of 2 pounds of silicon costing $2.50 per pound, 3 oz of solution costing $3 per ounce, and 15 minutes of direct labor at a labor rate of $18 per hour. Desired inventory levels are: Jan. 31 Feb. 28 Mar. 31 Beginning inventory Finished goods 4,300 4,800 4,900 Direct materials: silicon 8,300 9,200 9,000 Direct materials: solution 11,000 12,200 12,900

1. Prepare a sales budget. Lens Junction Sales Budget For the Two Months Ending February 28, 20XX January February Expected Sales (Units) Sales Price per Unit Total Sales Revenue Total

2. Prepare a production budget. Lens Junction Production Budget For the Two Months Ending February 28, 20XX January February Expected Sales Total Required Units Required Production Total

3. Prepare direct materials budget for silicon. Lens Junction For the Two Months Ending Fabrant Materials, Purinat for Silinn February Expected Sales Total Required Units Required Production Total

4.Prepare direct materials budget for silicon.

Answer:

Lens Junction

1. Lens Junction Sales Budget For the Two Months Ending February 28, 20XX

January February

Expected Sales (Units) 16,000 17,000

Sales Price per Unit $44 $44

Total Sales Revenue $704,000 $748,000

2. Lens Junction Production Budget For the Two Months Ending February 28, 20XX

January February

Expected Sales Total 16,000 17,000

Ending Inventory 4,800 4,900

Required Units 20,800 21,900

Beginning Inventory 4,300 4,800

Required Production Total 16,500 17,100

3 & 4. Lens Junction Direct Materials Budget For the Two Months Ending February

January February

Silicon Solution Silicon Solution

Expected Sales 32,000 48,000 34,000 51,000

Ending inventory 9,200 9,000 12,200 12,900

Total Required 41,200 57,000 46,200 63,900

Beginning inventory 8,300 11,000 9,200 12,200

Units Required 32,900 46,000 37,000 51,700

Explanation:

a) Data and Calculations:

Sales price of lenses per unit = $44

Estimated sales of lenses in January and February respectively = 16,000 and 17,000

Direct materials for each lense:

2 pounds of silicon at $2.50 per pound = $5.00

3 oz of solution at $3.00 per ounce = $9.00

Total cost of direct materials per unit = $14

15 minutes direct labor at $18 per hour = $4.50

Desired inventory levels:

Beginning inventory of finished goods:

January 4,300

February 4,800

March 4,900

Beginning inventory of direct materials:

Silicon Solution

January 8,300 11,000

February 9,200 12,200

March 9,000 12,900