Question

provided Nove Budgeted 2020 Sales: Water bottles February 7,000 produce a cash budger for March January 8.000 8,000 April 10,000 Additional information for your budget preparation is as follows: a) Because of increased competition the average sales price per water bottle in 2020 is expected to drop to b) Wonderful Water bottles has a policy that each month's ending inventory of finished goods (water bottles) $15.00 per bottle should be 20% of the following month's sales in units. Ending inventory on December 31,2019 followed c) Ending inventory of aluminum should be 40% of the next month's production needs in ounces. On average, this pattern each water bomrle will take 2 ounces of aluminum. The expected price for aluminum is $1.50 per ounce. Ending inventory on December 31, 2019 followed this pattern. Considering the April production schedule, the desired ending inventory of aluminum in March is 8,000 oz. d) Cash sales are 20% of total sales and are collected in the month of sale. The remaining sales are on account (credit) and are collected in the month following the month of sale. Accounts receivable on 12/31/19 is expected to be S140,000. e) Aluminum purchases are paid 30% in the month of purchase and 70% in the month following the month of purchase. Accounts Payable for purchases on 12/31/19 is expected to be $20,100. Budgeted labor costs for the plant for the three months of the first quarter are as follows:

Answer 1

	Production Budget
	Particulars			Jan	Feb	Mar	Quarter
	Expected Sales			9000	7000	8000	24000
Add:	Desired ending inventory			1400	1600	2000	5000
	Gross production required			10400	8600	10000	29000
Less:	Beginning inventory			1800	1400	1600	4800
	Net production required			8600	7200	8400	24200

	Direct Material Purchase Budget
	Particulars			Jan	Feb	Mar	Quarter
	Net production required			8600	7200	8400	24200
	Ounces req. per unit			2	2	2	2
	Total ounces			17200	14400	16800	48400
Add:	Desired ending inventory			5760	6720	8000	20480
	Gross raw material req			22960	21120	24800	68880
Less:	Beginning inventory			6880	5760	6720	19360
	Net raw material req.			16080	15360	18080	49520
	Cost per ounce			$           1.50	$           1.50	$           1.50	$           1.50
	Net purchase required			$ 24,120.00	$ 23,040.00	$ 27,120.00	$ 74,280.00