Production Budget and Direct Materials Purchases Budget

Jani Subramanian, owner of Jani's Flowers and Gifts, produces gift baskets for various special occasions. Each gift basket includes fruit or assorted small gifts (e.g., a coffee mug, deck of cards, novelty cocoa mixes, scented soap) in a basket that is wrapped in colorful cellophane. Jani has estimated the following unit sales of the standard gift basket for the rest of the year and for January of next year.

September	250
October	200
November	230
December	380
January	100

Jani likes to have 7% of the next month's sales needs on hand at the end of each month. This requirement was met on August 31.

Two materials are needed for each fruit basket:

Fruit	1 pound
Small gifts	6 items

The materials inventory policy is to have 7% of the next month's fruit needs on hand and 40% of the next month's production needs of small gifts. (The relatively low inventory amount for fruit is designed to prevent spoilage.) Materials inventory on August 31 met this company policy.

Please help me figure out desired inventory and beginning inventory for September. Note: small gifts. Attachment included.

Jani's Flowers and Gifts Direct Materials Purchases Budget For September, October, and November September October 246 202 Fruit: Production Pounds of fruit 1 1 Required for production 246 202 14 17 260 219 17 14 Desired ending inventory Total needs Less: Beginning inventory Pounds purchased Small gifts: Production 243 205 246 202 Items required 6 6 1,476 1,212 484 X 578 Needed for production Desired inventory Total needs Less: Beginning inventory 1,960 X 1,790 591 X 485 Items purchased 1,369 X 1,305