Question
The Energy Company produces an energy drink for which the main ingredient is caffeine. Budgeted sales for 2022 are as follows: Cans April 60,000 May
The Energy Company produces an energy drink for which the main ingredient is caffeine. Budgeted sales for 2022 are as follows: Cans April 60,000 May 80,000 June 65,000 July 55,000 The company has the following inventory requirements: The finished goods ending inventory must be equal to 3,000 cans plus 10% of the following month's sales. Each can of energy drink requires 5 grams of caffeine. The raw materials ending inventory must be equal to 10% of the following month's production needs for raw materials. Required (the three-line report heading is not needed): Prepare a production budget for the second quarter beginning April, by month and in total, for the cans of energy drink. (9.5 marks) Prepare a direct material purchases budget showing the quantity of caffeine to be purchased for May. (3.5 marks)
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