E9-22A Production and direct materials budgets (Learning Objective 2) Osborne Ma

Question

E9-22A Production and direct materials budgets (Learning Objective 2) Osborne Manufacturing produces self-watering planters for use in upscale retail estab- lishments. Sales mated unit sales of the planters each month to be as follows: ections for the first five months of the upcoming year s how the esti- January February March April May Number of planters to be sold 3,400 3,800 3,300 4,900 4,600 Inventory at the start of the year was 850 planters. The desired inventory of planters at the end of each month in th 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 $O.20 per pound. e upcoming year should be equal to 25% of the following

Explanation / Answer

Production budget January February March Quarter april Budgeted sales 3,400 3,800 3,300 10,500 4,900 Add:ending inventory 950 825 1225 1225 1150 total needs 4,350 4,625 4,525 11,725 6,050 less:beginning inventory -850 -950 -825 -850 -1225 production required 3,500 3,675 3,700 10,875 4,825 Direct Materials Budget January February March Quarter april production required 3,500 3,675 3,700 10,875 4,825 pounds required per unit 3 3 3 3 3 total pounds required 10500 11025 11100 32625 14475 Add:Ending inventory 2205 2220 2895 2,895 total needs 12705 13245 13995 35520 less beginning inventory -2541 -2205 -2220 -2541 materials required 10164 11040 11775 32979 cost per pound 0.2 0.2 0.2 0.2 total cost of materials 2033 2208 2355 6596

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