Peanut-Fresh Inc. produces all-natural organic peanut butter which is sold in 340-gram jars. The sales budget for
Question:
Company policy requires that ending inventories for each month be 20 percent 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: 680 grams of peanuts and one jar. Company policy requires that ending inventories of raw materials for each month be 10 percent 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.
2. Prepare separate direct materials purchases budgets for jars and for peanuts for the months of January and February.
Step by Step Answer:
Cornerstones of Managerial Accounting
ISBN: 978-0176530884
2nd Canadian edition
Authors: Maryanne M. Mowen, Don Hanson, Dan L. Heitger, David McConomy, Jeffrey Pittman