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Jupiter Company's budget for coming year estimates monthly sales in units for first five months of...

Jupiter Company's budget for coming year estimates monthly sales in units for first five months of the year as follows: April 35,000; May, 38,000; June 40,000; July, 39,000; and August 38,000.
The ending inventory of finished units for each month is to be maintained at 25% of next month's estimated sales. On April 1, there were 12,000 units on hand.
a. prepare a production budget (in units) for the first four months of the period. Rounds amounts to the nearest unit.


Jupiter company continued from (a) above. Each unit of finished product requires the use of four pound of materials. Materials are to be carried in inventory in an amount equal to 20% of expected production of the coming month. Beginning inventory on April 1 of the current year was 32,500 units of material. Each unit of material costs $2.

b. prepare a material purchases budget ( in units of materials and dollars) for the second quarter of the coming year. round amounts to the nearest unit.

Solutions

Expert Solution

a.

Jupiter Company
Production Budget
April, May, June and July
April May June July
Next month's budgeted sales (units) 38000 40000 39000 38000
Ratio of inventory to next month's sales 25% 25% 25% 25%
Budgeted ending inventory (units) 9500 10000 9750 9500
Budgeted unit sales for month 35000 38000 40000 39000
Required units of available production 44500 48000 49750 48500
Less: Beginning inventory (units) 12000 9500 10000 9750
Units to be produced 32500 38500 39750 38750

b.

Jupiter Company
Material Purchases Budget
For the Second Quarter
April May June Second Quarter July
Production budget (units) 32500 38500 39750 110750 38750
Material required per unit of production (pounds) 4 4 4 4 4
Materials needed for production 130000 154000 159000 443000 155000
Ending inventory @ 20% next month's expected requirement 30800 31800 31000 31000
Total material requirements (pounds) 160800 185800 190000 474000
Less: Beginning inventory 32500 30800 31800 32500
Materials to be purchased (pounds) 128300 155000 158200 441500
Material price per unit $       2.00 $       2.00 $       2.00 $       2.00
Budgeted raw material purchases $ 256600 310000 316400 883000

ekkarill92 answered 1 year ago
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