Donaldson Manufacturing produces self-watering planters for use in upscale retai

Question

Donaldson 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 fol (Click the icon to view additional information.) Inventory at the start of the year was 390 planters. The desired inventory of planters at the end of each month should be equal to 10% of the following month's budgeted sales. Each planter requires three pounds of polypropylene a 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 $0.25 per pound Read the requirements. Data Table Requirement 1. Prepare a production budget for each month in the first quarter of the year, including production in units for each month and for the q Donaldson Manufacturing Production Budget For the Months of January through March Number of planters to be sold January February March Apri May 3,900 3,700 3,100 4,500 4,900 January FebruaryMarch Quarter 3900 370 4270 390 3890 3700 310 4010 370 3640 3100 450 3550 310 10700 Unit sales Plus Desired ending inventory Total needed Less: Beginning inventory Units to produce 11150 390 10760 PrintDone

Explanation / Answer

Prepare direct material budget :

3

January February March Quarter Unit to be produced 3880 3640 3240 10760 Multiply by quantity of direct material needed per unit 3

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3 3 Quantity needed for production 11640 10920 9720 32280 Plus: Desired ending inventory of direct materials 2184 1944 2724 2724 Total quantity needed 13824 12864 12444 35004 Less: Beginning inventoy of direct materials (2328) (2184) (1944) (2328) Quantity to be purchase 11496 10680 10500 32676 Multiply by cost per pound 0.25 0.25 0.25 0.25 Total cost of direct material purchase 2874 2670 2625 8169

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