Question
Peanut-Fresh 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
Peanut-Fresh 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 48,000 100,800
Febuary 46,000 96,600
March 55,000 121,000
April 58,000 125,200
Company policy requires that ending inventories for each month be 20% of next months sales. At the beginning of January, the inventory of peanut butter is 14,500 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 10% 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 jars that should be produced eahc month as well as for the quarter in total.
2. Prepare seperate direct materials purchases budgets for jars and for peanuts for the months of January and Febuary.
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