Question

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.

(please explain how did you get the answer)!

Answer 1

PRODUCTION BUDGET
			APRIL	MAY	JUNE	QUARTER	JULY	AUGUST
Budgeted Sales Units			35,000	38,000	40,000	113,000	39,000	38,000
Add: Desired Ending Finished inventory			9,500	10,000	9,750	9,750	9,500
Total Needs			44,500	48,000	49,750	122,750	48,500
Less: Beginning Finished Inventory			12,000	9,500	10,000	12,000	9,750
Required Production in units			32,500	38,500	39,750	110,750	38,750
RAW MATERIAL PURCHASE BUDGET
			APRIL	MAY	JUNE	QUARTER	JULY
Budgeted Pproduction units			32,500	38,500	39,750	110,750	38,750
Raw material Required per unit			4	4	4	4	4
Ttotal Production needs			130,000	154,000	159,000	443,000	155,000
Add: Desired Ending Inventory			30,800	31,800	31,000	31,000
Total needs			160,800	185,800	190,000	474,000
Less: Beginning Inventory			32,500	30,800	31,800	32,500
Purchase Units			128,300	155,000	158,200	441,500
Cost price per unit			2.00	2.00	2.00	2.00
Budgeted Purchase in $			256,600	310,000	316,400	883,000