Production Budget and Direct Materials Purchases Budgets Peanut Land Inc. produc

Question

Production Budget and Direct Materials Purchases Budgets Peanut Land Inc. produces all-natural organic peanut butter. The peanut butt is as follows: er is sold in 12-ounce jars. The sales budget for the first four months of the year January February March April Company policy requires that ending inventories for each month be 20% of next month's sales. At the beginning of January, the inventory of peanut butter is 31,000 jars. Unit Sales 80,000 75,000 50,000 66,000 Dollar Sales ($) 152,000 142,500 95,000 125,400 Each jar of peanut butter needs two raw materials: 24 ounces of peanuts and one jar. Company policy requires that ending inventories of raw materials for each month be 20% of the next month's production needs. That policy was met on January 1, Required 1. Prepare a production budget for the first quarter of the year. Show the number of jars that should be produced each month as well as for the quarter in total. Peanut Land Inc Production Budget Check My Work 3 more Check My Work uses remaining Next 34 PM

Explanation / Answer

Production Budget Jan feb March total Sales 80,000 75,000 50,000 205,000 Desired Ending inventory 15000 10000 13200 13,200 Total needs 95,000 85,000 63,200 218,200 less Beginning inventory -31000 -15000 -10000 -31000 units produced 64,000 70,000 53,200 187,200 Direct materials purchase Budget Jan Feb total Production 64,000 70,000 134,000 jar 1 1 1 jars for production 64,000 70,000 134,000 desired ending inventory 14000 10640 10,640 total needs 78,000 80,640 144,640 less beginning inventory -12800 -14,000 -12,800 jars produced 65,200 66,640 131,840 Direct materials purchase Budget Jan Feb total march Production 64,000 70,000 134,000 53,200 ounces 24 24 24 24 ounces for production 1,536,000 1,680,000 3,216,000 1276800 desired ending inventory 336000 255360 255,360 total needs 1,872,000 1,935,360 3,471,360 less beginning inventory -307200 -336,000 -307,200 ounces purchased 1,564,800 1,599,360 3,164,160

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