MetaProduction 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 $40,000$

February $85,000$

March $60,000$

April $50,000$

Company policy requires that ending inventories for each month be $15\%$ 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 $1.$

Question Content Area

$1.$ 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.

Prepare a direct materials purchases budget for bottles for the months of January and February. Round all calculations to the

nearest whole number.

Pet Plus, Inc.

Direct Materials Purchases Budget for Bottles

For January and February

Prepare a direct materials purchases budget for salicylic acid and water mixture for the months of January and February. Round all

calculations to the nearest whole number.

Pet Plus, Inc.

Direct Materials Purchases Budget for Fluid mixture

For January and February