Question
In: Accounting
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 | 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 |
Solutions
Expert Solution
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 |
ekkarill92 answered 1 year agoRelated Solutions
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