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 45% 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.

Required:

1. Prepare a production budget for September, October, November, and December for gift baskets. (Note: Round all answers to the nearest whole unit.)

Jani's Flowers and Gifts
Production Budget for Gift Baskets
For September, October, November, and December
	September	October	November	December
Sales	fill in the blank 7e6026fc8ffaff6_1	fill in the blank 7e6026fc8ffaff6_2	fill in the blank 7e6026fc8ffaff6_3	fill in the blank 7e6026fc8ffaff6_4
Desired ending inventory	fill in the blank 7e6026fc8ffaff6_5	fill in the blank 7e6026fc8ffaff6_6	fill in the blank 7e6026fc8ffaff6_7	fill in the blank 7e6026fc8ffaff6_8
Needed	fill in the blank 7e6026fc8ffaff6_9	fill in the blank 7e6026fc8ffaff6_10	fill in the blank 7e6026fc8ffaff6_11	fill in the blank 7e6026fc8ffaff6_12
Less: Beginning inventory	fill in the blank 7e6026fc8ffaff6_13	fill in the blank 7e6026fc8ffaff6_14	fill in the blank 7e6026fc8ffaff6_15	fill in the blank 7e6026fc8ffaff6_16
Production	fill in the blank 7e6026fc8ffaff6_17	fill in the blank 7e6026fc8ffaff6_18	fill in the blank 7e6026fc8ffaff6_19	fill in the blank 7e6026fc8ffaff6_20

2. Prepare a direct materials purchases budget for the two types of materials used in the production of gift baskets for the months of September, October, and November. (Note: Round answers to the nearest whole unit.)

Jani's Flowers and Gifts
Direct Materials Purchases Budget
For September, October, and November
Fruit:	September	October	November
Production	fill in the blank 567aae01ff9aff1_1	fill in the blank 567aae01ff9aff1_2	fill in the blank 567aae01ff9aff1_3
Pounds of fruit	fill in the blank 567aae01ff9aff1_4	fill in the blank 567aae01ff9aff1_5	fill in the blank 567aae01ff9aff1_6
Required for production	fill in the blank 567aae01ff9aff1_7	fill in the blank 567aae01ff9aff1_8	fill in the blank 567aae01ff9aff1_9
Desired ending inventory	fill in the blank 567aae01ff9aff1_10	fill in the blank 567aae01ff9aff1_11	fill in the blank 567aae01ff9aff1_12
Total needs	fill in the blank 567aae01ff9aff1_13	fill in the blank 567aae01ff9aff1_14	fill in the blank 567aae01ff9aff1_15
Less: Beginning inventory	fill in the blank 567aae01ff9aff1_16	fill in the blank 567aae01ff9aff1_17	fill in the blank 567aae01ff9aff1_18
Pounds purchased	fill in the blank 567aae01ff9aff1_19	fill in the blank 567aae01ff9aff1_20	fill in the blank 567aae01ff9aff1_21
Small gifts:
Production	fill in the blank 567aae01ff9aff1_22	fill in the blank 567aae01ff9aff1_23	fill in the blank 567aae01ff9aff1_24
Items required	fill in the blank 567aae01ff9aff1_25	fill in the blank 567aae01ff9aff1_26	fill in the blank 567aae01ff9aff1_27
Needed for production	fill in the blank 567aae01ff9aff1_28	fill in the blank 567aae01ff9aff1_29	fill in the blank 567aae01ff9aff1_30
Desired inventory	fill in the blank 567aae01ff9aff1_31	fill in the blank 567aae01ff9aff1_32	fill in the blank 567aae01ff9aff1_33
Total needs	fill in the blank 567aae01ff9aff1_34	fill in the blank 567aae01ff9aff1_35	fill in the blank 567aae01ff9aff1_36
Less: Beginning inventory	fill in the blank 567aae01ff9aff1_37	fill in the blank 567aae01ff9aff1_38	fill in the blank 567aae01ff9aff1_39
Items purchased	fill in the blank 567aae01ff9aff1_40	fill in the blank 567aae01ff9aff1_41	fill in the blank 567aae01ff9aff1_42

3. Why do you think there is such a big difference in budgeted units from November to December? Why did Jani budget fewer units in January than in December?

1. December includes the holiday season and is a time when many gifts are given, January is a month of fewer gift giving occasions.
2. December is the last month of the year so Jani has too budget all the balance units in her Annual budget to meet her targets.
3. None of the above.