Jupiter Company\'s budget for coming year estimates monthly sales in units for f

Question

Jupiter Company's budget for coming year estimates monthly sales in units for first five months of the year as follows: April 35,000; May, 38,000; June 40,000; July, 39,000; and August 38,000.
The ending inventory of finished units for each month is to be maintained at 25% of next month's estimated sales. On April 1, there were 12,000 units on hand.
a. prepare a production budget (in units) for the first four months of the period. Rounds amounts to the nearest unit.


Jupiter company continued from (a) above. Each unit of finished product requires the use of four pound of materials. Materials are to be carried in inventory in an amount equal to 20% of expected production of the coming month. Beginning inventory on April 1 of the current year was 32,500 units of material. Each unit of material costs $2.

b. prepare a material purchases budget ( in units of materials and dollars) for the second quarter of the coming year. round amounts to the nearest unit.

Explanation / Answer

a.

b.

Jupiter Company Production Budget April, May, June and July April May June July Next month's budgeted sales (units) 38000 40000 39000 38000 Ratio of inventory to next month's sales 25% 25% 25% 25% Budgeted ending inventory (units) 9500 10000 9750 9500 Budgeted unit sales for month 35000 38000 40000 39000 Required units of available production 44500 48000 49750 48500 Less: Beginning inventory (units) 12000 9500 10000 9750 Units to be produced 32500 38500 39750 38750

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