Jupiter Company\'s budget for coming year estimates monthly sales in units for f
ID: 2406701 • Letter: J
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.
(please explain how did you get the answer)!
Explanation / Answer
PRODUCTION BUDGET APRIL MAY JUNE QUARTER JULY AUGUST Budgeted Sales Units 35,000 38,000 40,000 113,000 39,000 38,000 Add: Desired Ending Finished inventory 9,500 10,000 9,750 9,750 9,500 Total Needs 44,500 48,000 49,750 122,750 48,500 Less: Beginning Finished Inventory 12,000 9,500 10,000 12,000 9,750 Required Production in units 32,500 38,500 39,750 110,750 38,750 RAW MATERIAL PURCHASE BUDGET APRIL MAY JUNE QUARTER JULY Budgeted Pproduction units 32,500 38,500 39,750 110,750 38,750 Raw material Required per unit 4 4 4 4 4 Ttotal Production needs 130,000 154,000 159,000 443,000 155,000 Add: Desired Ending Inventory 30,800 31,800 31,000 31,000 Total needs 160,800 185,800 190,000 474,000 Less: Beginning Inventory 32,500 30,800 31,800 32,500 Purchase Units 128,300 155,000 158,200 441,500 Cost price per unit 2.00 2.00 2.00 2.00 Budgeted Purchase in $ 256,600 310,000 316,400 883,000
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