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Production Budget and Direct Materials Purchases Budgets Peanut Land Inc. produces all-natural organic peanut butter. The...

Production Budget and Direct Materials Purchases Budgets

Peanut Land Inc. produces all-natural organic peanut butter. The peanut butter is sold in 12-ounce jars. The sales budget for the first four months of the year is as follows:

Unit Sales Dollar Sales ($)
January 50,000 95,000
February 85,000 161,500
March 40,000 76,000
April 46,000 87,400

Company policy requires that ending inventories for each month be 25% of next month's sales. At the beginning of January, the inventory of peanut butter is 32,000 jars.

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.

2. Prepare a direct materials purchases budget for jars for the months of January and February.

Prepare a direct materials purchases budget for peanuts for the months of January and February.

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Expert Solution

ekkarill92 answered 2 years ago
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