ets Plus, Inc. produces otic fluid for dogs. The otic fluid is sold in $12-$ounce plastic bottles. The sales budget for the first $4$ months of the year is as follows:

Month Unit Sales

January $8,000$

February $9,500$

March $12,000$

April $13,900$

Company policy requires that ending inventories for each month be $15\%$ of next month's sales. At the beginning of January, the inventory of otic fluid is $900$ bottles.

Each bottle of otic fluid needs two raw materials: eight ounces of a mix of salicylic acid and water and one plastic bottle. 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 $1.$

Required:

Download Excel spreadsheet

Question Content Area

$1.$ Prepare a production budget for the first quarter of the year. Show the number of bottles that should be produced each month as well as for the quarter in total.

Pets Plus, Inc.

Production Budget

For the First Quarter of the Year

Line Item Description January February March Total

Sales Sales

Sales

Sales

Sales

Desired ending inventory Desired ending inventory

Desired ending inventory

Desired ending inventory

Desired ending inventory

Total needs Total needs

Total needs

Total needs

Total needs

Less: Beginning inventory Less: Beginning inventory

Less: Beginning inventory

Less: Beginning inventory

Less: Beginning inventory

Units produced Units produced

Units produced

Units produced

Units produced

Question Content Area

$2.$ Prepare a direct materials purchases budget for bottles for the months of January and February. Round all calculations to the nearest whole number.

Pet Plus, Inc.

Direct Materials Purchases Budget for Bottles

For January and February

Line Item Description January February Total

Production Production

Production

Production

Number of Bottles Number of Bottles

Number of Bottles

Number of Bottles

Bottles for production Bottles for production

Bottles for production

Bottles for production

Desired ending inventory Desired ending inventory

Desired ending inventory

Desired ending inventory

Total needs Total needs

Total needs

Total needs

Less: Beginning inventory Less: Beginning inventory

Less: Beginning inventory

Less: Beginning inventory

Bottles purchased Bottles purchased

Bottles purchased

Bottles purchased

Question Content Area

Prepare a direct materials purchases budget for salicylic acid and water mixture for the months of January and February. Round all calculations to the nearest whole number.

Pet Plus, Inc.

Direct Materials Purchases Budget for Fluid mixture

For January and February

Line Item Description January February Total

Production Production

Production

Production

Ounces Ounces

Ounces

Ounces

Ounces for production Ounces for production

Ounces for production

Ounces for production

Desired ending inventory Desired ending inventory

Desired ending inventory

Desired ending inventory

Total needs Total needs

Total needs

Total needs

Less: Beginning inventory Less: Beginning inventory

Less: Beginning inventory

Less: Beginning inventory

Ounces purchased Ounces purchased

Ounces purchased

Ounces purchased