Peanut-Fresh Inc. produces all-natural organic peanut butter. The peanut butter is sold in12-ounce jars. The sales budget
Question:
Peanut-Fresh Inc. produces all-natural organic peanut butter. The peanut butter is sold in12-ounce jars. The sales budget for the ï¬rst four months of the year is as follows:
Company policy requires that ending inventories for each month be 20% of next month's sales.At the beginning of January, the inventory of peanut butter is 14,500 jars.Each jar of peanut butter needs two raw materials: 24 ounces of peanuts and one jar. Com-pany policy requires that ending inventories of raw materials for each month be 10% of the nextmonth's production needs. That policy was met on January 1.
Required:
1. Prepare a production budget for the ï¬rst quarter of the year. Show the number of jars thatshould be produced each month as well as for the quarter in total.
2. Prepare separate direct materials purchases budgets for jars and for peanuts for the monthsof January and February.
Step by Step Answer:
Cornerstones of Managerial Accounting
ISBN: 978-1305103962
6th edition
Authors: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger