Question

Johnson Manufacturing produces self-watering planters for use in upscale retail establishments. Sales projections for the first five months of the upcoming year show the estimated unit sales of the planters each month to be as follows: (Click the icon to view additional information.) Inventory at the start of the year was 640 planters. The desired Inventory of planters at the end of each month should be equal to 20% of the following month's budgeted sales. Each planter requires four pounds of polypropylene (a type of plastic). The company wants to have 10% of the polypropylene required for next month's production on hand at the end of each month. The polypropylene costs $0.25 per pound. Read the requirements. i Data Table Quarter 10.160 Number of planters to be sold Johnson Manufacturing Direct Materials Budget For the Months of January through March January February March Units to be produced 3,280 3.500 3,380 Multiply by: Quantity of direct materials needed per unit Quantity needed for production 13,120 14.000 13,520 Plus: Desired ending inventory of direct materials 1,400 1,352 1,816 Total quantity needed 14,520 15,352 15,336 Less: Beginning inventory of direct materials 6401 1,400 1,352 Quantity to purchase 13880 13,952 1 3,984 Multiply by: Cost per pound 0.25 S 0.25 $ 0.25 Total cost of direct material purchases 3470 S 3,488 $ 3.496 January ...... 3,200 40,640 1,816 February ... 42,456 640 March April. 3,600 3,100 4,500 4,700 May --- 41816 0.25 $ 10454 Print Done Enter any number in the edit fields and then click Check Answer.

Answer 1

Solution

Johnson Manufacturing
Material Budget
	Month
	January	February	March	Quarter
Budgeted production (units)	3280	3500	3380	10160
Materials requirements per unit	4	4	4	4
Quantity needed for production	13120	14000	13520	40640
Plus: Desired end inventory for Dm	1400	1352	1920	1920
Total quantity needed	14520	15352	15440	42560
Less: Beginning inventory of DM	1312	1400	1352	1312
Quantity to be purchased	13208	13952	14088	41248
Multiplied by : Cost per yard	$         0.25	$         0.25	$         0.25	$         0.25
Total cost of DM purchases	$           3,302	$           3,488	$           3,522	$         10,312

Working

Desired ending inventory of march should be 1920............(4800 x 4 x 10%)

Johnson Manufacturing
Production budget
For the Month of January through March
	January	February	March	April
Unit sales	3200	3600	3100	4500
Plus: Desired ending inventory	720	620	900	940
Total Needed	3920	4220	4000	5440
Less: Beginning inventory	640	720	620	640
Units to produce	3280	3500	3380	4800