ul Llat shows both the number of ile uBllar amount of the purchases in the budge
ID: 2582265 • Letter: U
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ul Llat shows both the number of ile uBllar amount of the purchases in the budget. cO.21A Production and direct materials budgets Leaning Objective 2) en Manufacturing produces self-watering planters for use in upscale retail establish- ments. Sales projections for the first five months of the upcoming year show the esti- mated unit sales of the planters each month to be as follows: Number of planters to be sold 3,200 3,000 3,500 4,300 4,600 January.. March April. May Inventory at the start of the year was 800 planters. The desired inventory of planters at the end of each month in the upcoming year should be equal to 25% of the following month's budgeted sales. Each planter requires two pounds of polypropylene (a type of plastic). The company wants to have 20% of the polypropylene required for nextmonth's production on hand at the end of each month. The polypropylene costs $0.10 per pound. Requirements 1. Prepare a production budget for each month in the frst quarter of the year, including production in units for each month and for the quarter. Prepare a direct materials budget for the polypropylene for each month in the first quarter of the year, including the pounds of polypropylene required and the total cost of the polypropylene to be purchased. 2.Explanation / Answer
Production Budget Jan feb March total April Expected sale units 3,200 3,000 3,500 9,700 4,300 add ending inventory 750 875 1075 1,075 1150 total needs 3,950 3,875 4,575 10,775 5,450 less opening inventory -800 -750 -875 -800 -1075 purchase required 3,150 3,125 3,700 9,975 4,375 Direct materials budget Jan feb March total april purchase required 3,150 3,125 3,700 9,975 4,375 pounds required per unit 2 2 2 2 2 total pounds required 6300 6250 7400 19950 8750 add ending inventory 1250 1480 1750 1,750 total needs 7550 7730 9150 21700 less opening inventory -1260 -1,250 -1,480 -1,260 total materials required 6290 6480 7670 20440 cost per pound 0.1 0.1 0.1 0.1 total cost of materials 629 648 767 2044
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