Question

Cleary 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: (Click the icon to view additional information.) 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 two pounds of polypropylene (a type of plastic). The company wants to have 10% 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. Cleary 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 Enter any number in the edit fields and then click Check Answer.

Answer 1

Production Budget January February March 3,600 3,300 3,100 825 775 1,175 4,425 4,075 4,275 825 775 3,525 3,250 3,500 Workings purpose April May 4,700 4,900 1,225 Unit sales Add: Desired ending inventory Total needed Less: Beginning inventory Units to produce Quarter 10,000 1,175 11,175 900 10,275 (25% of next Month's budgeted unit sales) 5,925 900 1,175 4,750 Direct Materials Budget Quarter 10,275 L 2 April 4,750 (refer workings above) 2 pounds 9,500 (10% of next month's production needs) Units to be produced Multiply by: Quantity of direct materials needed per unit Materials needed for production (lbs.) Plus: Desired ending inventory of direct materials Total materials requirements (lbs.) Less: Beginning inventory of direct materials Materials to be purchased (lbs.) Multiply by: costs per pound Total Budgeted direct material cost January February March 3,525 3,250 3,500 2 7,050 6,500 7,000 650 700 950 7,700 7,200 7,950 705 650 700 6,995 6,550 7,250 $ 0.20 $ 0.20 $ 0.20 $ 1,399 $ 1,310 $ 1,450 20,550 950 21,500 705 20,795 $ 0.20 $ 4,159 (10% of current month's production needs)