Question

Johnson Manufacturing produces self-watering planters for use in upscale real 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 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 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 $0.25 per pound Read the requirements

Answer 1

Johnson Manufacturing Production Budget For the Months of January thru March January February Unit Sales 3,900 3,700 Add: Desired ending inventory 370 310 Total inventory needed 4,270 4,010 Less: Beginning inventory -390 -370 Units to Produce 3,880 3,640 March 3,100 450 3,550 -310 3,240 Quarter 10,700 450 [January = 3700x10%; February = 3100x10%; March = 4500x10%] 11,150 -390 [January = Given; February = 3700x10%; March = 3100x10%] 10,760 270 3,640 Johnson Manufacturing Direct Materials Purchase Budget For the Months of January thru March January February Units to Produce 3,880 Quantity of Direct material needed per unit 3 Materials needed in production 11,640 10,920 Add: Desired end. inventory of direct materials 2,184 1,944 Material needed in inventory 13,824 12,864 Deduct: Beginning inventory -2,328 -2,184 D.M. to be purchased 11,496 10,680 Cost per unit of material $0.25 $0.25 Cost of D.M. to be purchased $2,874 $2,670 March 3,240 3 9,720 2,964 12,684 -1,944 10,740 $0.25 $2,685 Quarter 10,760 --> (u) (As calculated in Requirement-1] 3 --> (v) 32,280 --> (u) x (v) 2,964 [January = 10920x20%; February = 9720x20%; March = (4900+4900*10%-450) x 3 x 20%] 35,244 -2,328 [January = 11640x20%; February = 10920x20%; March = 9720x20%] 32,916 --> (c) $0.25 --> (d) $8,229 --> (c) x (d)