Question

Stenback 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 140 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 requires four 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 $0.25 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 March Quarter Stenback Manufacturing Production Budget For the Month of January through March January February Unit Sales Plus: Desired ending inventory Total needed Loss Beginning inventory Units to produce

Answer 1

1.

Production Budget
	January	February	March	Quarter	April
Budgeted Sales units	3200	3600	3100	9900	4500
Add : Desired Ending Inventory	720	620	900	900	940
Units Required	3920	4220	4000	10800	5440
Less : Beginning Inventory	640	720	620	640	900
Production Required	3280	3500	3380	10160	4540

Ending Inventory is 20% of next month sales

2.

Purchase Budget
	January	February	March	Quarter	April
Production Required	3280	3500	3380	10160	4540
Material per unit (pounds)	4	4	4	4	4
Production Needs	13120	14000	13520	40640	18160
Budgeted Ending inventory	1400	1352	1816	1816
Total Material Required	14520	15352	15336	42456
Beginning Inventory	1312	1400	1352	1312
Budgeted Purchases (Pounds)	13208	13952	13984	41144
Standard Price per pound	$        0.25	$          0.25	$             0.25	$         0.25
Budgeted Purchases Cost	$      3,302	$       3,488	$          3,496	$    10,286

Ending Inventory is 10% of next month production needs