Question

Preston 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: EE (Click the icon to view additional information.) at the start of the year was 640 planters. The desired inventory of planters at the end of each month should be equal to 20% of the following month's budgeted sales. Each planter pylene required or next month's production on hand at the end of each month. The pe of plastic). The company wants to have 10% of the polyp requires four pounds polyp ene a polypropylene costs $o.25 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 Preston Manufacturing Production Budget For the Months of January through March January February March Quarter Unit sales Plus: Desired ending inventory Total needed Less: Beginning inventory Units to produce Requirement 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. Start by preparing the direct materials budget through the total quantity needed, then complete the budget Preston Manufacturing Data Table Direct Materials Budget For the Months of January through March January February March Quarter Number of planters to be sold Units to be produced Multiply by: Quantity of direct materials needed per unit January 3,200 February 3,600 Quantity needed for production Desired ending inventory of March 3,100 April 4,500 Plus: direct materials May 4,700 Total quantity needed Beginning inventory of direct Print Done Less: materials Quantity to purchase Multiply by Cost per pound Total cost of direct material purchases

Answer 1

PRESTON MANUFACTURING
PRODUCTION BUDGET
FOR THE MONTH OF JANUARY THROUGH MARCH
	JANUARY	FEBRUARY	MARCH	QUARTER		APRIL
UNIT SALES	3200	3600	3100	9900		4500
PLUS:DESIRED INVENTORY (20% OF NEXT MONTH SALES)	720	620	900	2240		940
	3600 X 20%	3100 X 20%	4500 X20%			4700 X20%
TOTAL NEEDED	3920	4220	4000	12140		5440
LESS:BEGINNING INVENTORY	640	720	620	1980		900
UNITS TO PRODUCE	3280	3500	3380	10160		4540
DIRECT MATERIAL BUDGET
	JANUARY	FEBRUARY	MARCH	QUARTER		APRIL
UNITS TO BE PRODUCED	3280	3500	3380	10160		4540
X QUANTITY OF DIRECT MATERIAL PER UNIT (POUNDS)	4	4	4	4		4
QUANTITY NEEDED FOR PRODUCTION	13120	14000	13520	40640		18160
PLUS: DESIRED ENDING MATERIAL NEEDED (10% OF PRODUCTION ON HAND )	1400	1352	1816	4568
	(14000 X10%)	(13520 X10%)	(18160 X 10%)
TOTAL QUANTITY NEEDED	14520	15352	15336	45208
LESS: BEGINNING DIRECT MATERIAL	1312	1400	1352	4064
QUANTITY TO PURCHASE	13208	13952	13984	41144
X COST PER UNIT	0.25	0.25	0.25	0.25
TOTAL COST OF DIRECT MATERIAL PURCHASE	3302	3488	3496	10286
OPENING INVENTORY FOR JANUARY 10% OF PRODUCTION ON HAND , ie 10% OF 13120 ( JANUARY PRODUCTION) = 1312 UNITS