Question

Anderson Manufacturing produces self-watering planters for use in upscale retail establishment 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 750 planters. The desired inventory of planter the end of each month should be equal to 25% of the following month's budgeted sales. Each planer requires two pounds of polypropylene (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 $0.20 per pound Read the requirements 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 quarter. Anderson Manufacturing Production Budget Requirements For the Months of January through March January February March Quarter 1. Prepare a production budget for each month in the first quarter of the year, Unit sales including production in units for each month and for the quarter Plus Desired ending inventory 2. 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 needed total cost of the polypropylere to be purchased Loss Beginning inventory Units to produce Print Done Enter any number in the edit fields and then click Check Answer.

Answer 1

Ans. 1	Anderson Manufacturing
	Production Budget
	For the Months of January through March
		January	February	March	Quarter
	Unit sales	3,000	3,200	3,100	9,300
	Add: Desired Ending inventory	800	775	1050	2,625
	Total needs	3,800	3,975	4,150	11,925
	Less: Beginning inventory	-750	-800	-775	-2,325
	Units to be produced	3,050	3,175	3,375	9,600
*Calculations for Ending inventory:					*Calculations for Beginning inventory:
Months				Months
January	3,200 * 25%	800		January	(given)	750
February	3,100 * 25%	775		February	Ending inventory of January	800
March	4,200 * 25%	1050		March	Ending inventory of February	775
	Beginning finished goods invenotry of current month =   Ending inventory of previous month
Ans.   2	Anderson Manufacturing
	Production Budget
	For the Months of January through March
		January	February	March	Quarter
	Budgeted production (units)	3,050	3,175	3,375	9,600
	(X) Materials requirement per unit	2	2	2	2
	Materials needed for production	6100	6350	6750	19200
	Add: budgeted ending inventory	1270	1350	1660	4280
	Total materials requirements	7370	7700	8410	23480
	Less: Budgeted beginning inventory	-1220	-1270	-1350	-3840
	Materials to be purchased	6150	6430	7060	19640
	(X) Direct materials per unit	$0.20	$0.20	$0.20	$0.20
	Total budgeted direct materials	$1,230	$1,286	$1,412	$3,928
	*Ending inventory for current quarter = Materials requirements of next quarter * 20%
	*Beginning inventory for Current quarter = Ending inventory of previous quarter
	*Calculations for Ending inventory:			*Calculations for Beginning inventory:
Months				Months
January	6,350 * 20%	1270		January	(calculted below)	1220
February	6,750 * 20%	1350		February	Ending inventory of January	1270
March	8,300 * 20%	1660		March	Ending inventory of February	1350
	Materials needed for production for the Month of April:
		April
	Unit sales	4,200
	Add: Desired Ending inventory (4,000*25%)	1000
	Total needs	5,200
	Less: Beginning inventory	-1050
	Units to be produced	4,150
	(X) Materials requirement per unit	2
	Materials needed for production	8,300
	*Beginning inventory for January = Ending inventory for December = 20% of January month's materials needed for production
	6,100 * 20%
	1220