X E9-21A (similar to) E Question Help C Cleary Manufacturing produces self-water

Question

X E9-21A (similar to) E Question Help C 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: FE (Click the icon to view additional information.) Inventory at the start of the year was 350 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 two 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. Requirement 1. Prepare a production budget for each month in the first quarter of the yearincluding production in units for each month and for the quarter O Data Table Cleary Manufacturing Production Budget For the Months of January through March January February , March Quarter Number of planters to be sold Unit sales 3,500 Plus: Desired ending inventory January..... February 3,400 Total needed March 3,600 Less: Beginning inventory 4,000 Units to produce May 4, 200 Print Done

Explanation / Answer

Cleary Manufacturing Working note Production Budget For the month of January to March January February March Quarter April Budgeted Sales Units 3500 3400 3600 10500 4000 (+) Ending inventory (10% of next quarters sales) 340 360 400 1100 420 (4000*10%) (4200*10%) (-) Begning Inventory 350 340 360 400 400 Budgeted Production 3490 3420 3640 11200 4020 Cleary Manufacturing Working note Direct Material Purchase Budget For the month of January to March January February March Quarter April Budgeted Production 3490 3420 3640 10550 4020 Material A requirement per unit 2 2 2 2 2 Material needed for production 6980 6840 7280 21100 8040 Budgeted ending inventory (20% of next months production) 1368 1456 1608 1368 (8040*20%) Total material requirements 8348 8296 8888 22468 Less: Budgeted begning inventory 1396 1368 1456 1456 (6980*20%) Material to be purchased 6952 6928 7432 21012 Direct material cost per pound 0.25 0.25 0.25 0.25 Total budgeted direct material 1738 1732 1858 5253

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