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

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

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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