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Production Budget and Direct Materials Purchases Budgets

Pets Plus, Inc. produces otic fluid for dogs. The otic fluid is sold in 12-ounce plastic bottles. The sales budget for the first four months of the year is as follows:

Month	Unit Sales
January	50,000
February	75,000
March	40,000
April	54,000

Company policy requires that ending inventories for each month be 10% of next month's sales. At the beginning of January, the inventory of otic fluid is 34,000 bottles. Each bottle of otic fluid needs two raw materials: eight ounces of a mix of salicylic acid and water and one plastic bottle. 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.

1. Prepare a production budget for the first quarter of the year. Show the number of bottles that should be produced each month as well as for the quarter in total.

7 Check My Wor to be produced. Beginning inventory is given for the first month and is carried forward from the previous month for later months. Review the "How to Prepare a Production Budget" example in the text. 2. Prepare a direct materlals purchases budget for bottles for the months of January and February. Round all calculations to the nearest whole number. -... - Feedback Theck My Work Fill in the units produced from Requirement 1. Production in units Materials per unit = Direct Materials Needed for Production Beginning inventory is calculated from current month production for the first month and is carried forward from the previous month for later months. Direct Materials Needed for Production + Direct Materials in Desired Ending Inventory - Direct Materials in Beginning Inventory = Purchases Review the "How to Prepare a Direct Materials Purchases Budget" example in the text