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Production Budget and Direct Materials Purchases Budgets Peanut Land Inc. produces all-natural organic peanut butter. The peanut butter is sold in 12-ounce jars. The sales
Production Budget and Direct Materials Purchases Budgets Peanut Land 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 60,000 114,000 February 45,000 85,500 March 50,000 95,000 April 58,000 110,200 Company policy requires that ending inventories for each month be 10% of next month's sales. At the beginning of January, the inventory of peanut butter is 38,000 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 20% of the next month's production needs. That policy was met on January 1. Required: 1. Prepare a production budget for the first quarter of the year. Show the number of jars that should be produced each month as well as for the quarter in total. Peanut Land Inc. Production Budget For the First Quarter of the Year January February March Total Sales 60,000 45,000 50,000 155,000 Desired ending inventory 1,500 5.000 Total needs Less: Beginning inventory Units produced 2. Prepare a direct materials purchases budget for jars for the months of January and February. Peanut Land Inc. Direct Materials Purchases Budget for Jars For January and February January February Total Production Jar Jars for production Desired ending inventory Total needs Less: Beginning inventory Jars purchased Prepare a direct materials purchases budget for peanuts for the months of January and February. Peanut Land Inc. Direct Materials Purchases Budget for Peanuts For January and February January February Total Production Ounces Ounces for production Desired ending inventory Total needs Less: Beginning inventory Ounces purchased
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