Rouse Manufacturing produces self-watering planters for use in upscale retail es

Question

Rouse Manufacturing produces self-watering planters for use in upscale retail establishments. Sales projections for the first five months of the upcoming year show the estimated unit sales of the planters each month to be as follows: (Click the icon to view additional information.) Inventory at the start of the year was 850 planters. The desired inventory of planters at the end of each month should be equal to 25% of the following month's budgeted sales. Each planter requires four pounds of polypropylene (a type of plastic). The company wants to have 20% of the polypropylene required for next month's production on hand at the end of each month. The polypropylene costs $0.10 per pound. Read the requirements

Explanation / Answer

Production budget :

b) Direct material budget :

January February March Quarter Sales units 3400 3500 3100 10000 Add: Desired ending inventory 875 775 1200 1200 Total needs 4275 4275 4300 11200 Less: Beginning inventory (850) (875) (775) (850) Production units 3425 3400 3525 10350

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