In: Accounting
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 | 40,000 | 80,000 |
February | 75,000 | 150,000 |
March | 70,000 | 140,000 |
April | 66,000 | 132,000 |
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 35,000 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.
Peanut Land Inc. | ||||
Production Budget | ||||
For the First Quarter of the Year | ||||
January | February | March | Total | |
Sales | fill in the blank 071f92028f87071_1 | fill in the blank 071f92028f87071_2 | fill in the blank 071f92028f87071_3 | fill in the blank 071f92028f87071_4 |
Desired ending inventory | fill in the blank 071f92028f87071_5 | fill in the blank 071f92028f87071_6 | fill in the blank 071f92028f87071_7 | fill in the blank 071f92028f87071_8 |
Total needs | fill in the blank 071f92028f87071_9 | fill in the blank 071f92028f87071_10 | fill in the blank 071f92028f87071_11 | fill in the blank 071f92028f87071_12 |
Less: Beginning inventory | fill in the blank 071f92028f87071_13 | fill in the blank 071f92028f87071_14 | fill in the blank 071f92028f87071_15 | fill in the blank 071f92028f87071_16 |
Units produced | fill in the blank 071f92028f87071_17 | fill in the blank 071f92028f87071_18 | fill in the blank 071f92028f87071_19 | fill in the blank 071f92028f87071_20 |
2. Prepare a direct materials purchases budget for jars for the months of January and February.
Peanut Land Inc. | |||
Direct Materials Purchases Budget for Jars | |||
For January and February | |||
January | February | Total | |
Production | fill in the blank 1e1f0e089016ff2_1 | fill in the blank 1e1f0e089016ff2_2 | fill in the blank 1e1f0e089016ff2_3 |
Jar | fill in the blank 1e1f0e089016ff2_4 | fill in the blank 1e1f0e089016ff2_5 | fill in the blank 1e1f0e089016ff2_6 |
Jars for production | fill in the blank 1e1f0e089016ff2_7 | fill in the blank 1e1f0e089016ff2_8 | fill in the blank 1e1f0e089016ff2_9 |
Desired ending inventory | fill in the blank 1e1f0e089016ff2_10 | fill in the blank 1e1f0e089016ff2_11 | fill in the blank 1e1f0e089016ff2_12 |
Total needs | fill in the blank 1e1f0e089016ff2_13 | fill in the blank 1e1f0e089016ff2_14 | fill in the blank 1e1f0e089016ff2_15 |
Less: Beginning inventory | fill in the blank 1e1f0e089016ff2_16 | fill in the blank 1e1f0e089016ff2_17 | fill in the blank 1e1f0e089016ff2_18 |
Jars purchased | fill in the blank 1e1f0e089016ff2_19 | fill in the blank 1e1f0e089016ff2_20 | fill in the blank 1e1f0e089016ff2_21 |
Prepare a direct materials purchases budget for peanuts for the months of January and February.
Peanut Land Inc. | |||
Direct Materials Purchases Budget for Peanuts | |||
For January and February | |||
January | February | Total | |
Production | fill in the blank 22b01f050077067_1 | fill in the blank 22b01f050077067_2 | fill in the blank 22b01f050077067_3 |
Ounces | fill in the blank 22b01f050077067_4 | fill in the blank 22b01f050077067_5 | fill in the blank 22b01f050077067_6 |
Ounces for production | fill in the blank 22b01f050077067_7 | fill in the blank 22b01f050077067_8 | fill in the blank 22b01f050077067_9 |
Desired ending inventory | fill in the blank 22b01f050077067_10 | fill in the blank 22b01f050077067_11 | fill in the blank 22b01f050077067_12 |
Total needs | fill in the blank 22b01f050077067_13 | fill in the blank 22b01f050077067_14 | fill in the blank 22b01f050077067_15 |
Less: Beginning inventory | fill in the blank 22b01f050077067_16 | fill in the blank 22b01f050077067_17 | fill in the blank 22b01f050077067_18 |
Ounces purchased | fill in the blank 22b01f050077067_19 | fill in the blank 22b01f050077067_20 | fill in the blank 22b01f050077067_21 |
1. Production budget for the first quarter of the year
January | February | March | Total | |
Sales | 40,000 | 75,000 | 70,000 | 185,000 |
Desired ending Inventory | 15,000 (75,000*20%) | 14,000 (70,000*20% | 13,200 (66,000*20%) | 42,200 |
Total Needs | 55,000 | 89,000 | 83,200 | 227,200 |
Less:-Beginning Inventory | 35,000 | 15,000 | 14,000 | 64,000 |
Units Produced | 20,000 | 74,000 | 69,200 | 163,200 |
2. Direct materials purchases budget for jars for the months of January and February
January | February | Total | |
Production | 20,000 | 74,000 | 94,000 |
Jar | 1 | 1 | 1 |
Jars for Production | 20,000 | 74,000 | 94,000 |
Desired ending Inventory | 14,800 (74,000*20%) | 13,840 (69,200*20%) | 28,640 |
Total Needs | 34,800 | 87,840 | 122,640 |
Less:- Beginning Inventory | - | 14,800 | 14,800 |
Jars Purchased | 34,800 | 73,040 | 107,840 |
3.Direct materials purchases budget for peanuts for the months of January and February.
January | February | Total | |
Production | 20,000 | 74,000 | 94,000 |
Ounces | 24 | 24 | 24 |
Ounces for Production | 480,000 | 1,776,000 | 2,256,000 |
Desired ending Inventory | 355,200 (1,776,000*20%) | 332,160 (1,660,800*20%) | 687,360 |
Total Needs | 835,200 | 2,108,160 | 2,943,360 |
Less:- Beginning Inventory | - | 355,200 | 355200 |
Ounces Purchased | 835,200 | 1,752,960 | 2,588,160 |