Question

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:

Inventory at the start of the year was 900 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 thre 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.

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.
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 cost of the polypropylene to be purchased.

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.

Number of planters to be sold January . . . . . 3,600 February . . . . . 3,400 March . . . . . . . 3,200 April . . . . . . . . 4,800 May . . . . . . . . 4,000

Answer 1

Production Budget - Self Watering Planter
	January	February	March	Quarter	April	May
Unit sales (given)	3,600.00	3,400.00	3,200.00	10,200.00	4,800.00	4,000.00
Desired ending inventory ( 25% of Next Month Sales)	850.00	800.00	1,200.00	1,200.00	1,000.00
Total needed	4,450.00	4,200.00	4,400.00	11,400.00	5,800.00
Beg Inventory	(900.00)	(850.00)	(800.00)	(900.00)	(1,200.00)
Units produced	3,550.00	3,350.00	3,600.00	10,500.00	4,600.00

Direct Materials Purchases Budget - Polyvinyl
Polyvinyl chloride panels:	January	February	March	April
Units produced (a)	3,550.00	3,350.00	3,600.00	4,600.00
Raw material Require   for production one unit (b)	3.00	3.00	3.00	3
Total raw material require (c=aXb)	10,650.00	10,050.00	10,800.00	13,800.00
Desired ending inventory ( 20% of Next Month Prouction (d)	2,010.00	2,160.00	2,760.00
Total needed (e=c+d)	12,660.00	12,210.00	13,560.00
Less: Beg Inventory (f)	2,130.00	2,010.00	2,160.00
Direct materials purchases (g=e-f)	10,530.00	10,200.00	11,400.00
Cost per Pound (h)	0.1	0.1	0.1
Purchase Cost (gXh)	1,053.00	1,020.00	1,140.00