Amber, owner of Amber’s Flowers and Gifts, produces gift baskets for various special occasions. Each gift basket includes fruit or assorted small gifts (e.g., a coffee mug, deck of cards, novelty cocoa mixes, scented soap) in a basket that is wrapped in colorful cellophane. Amber has estimated the following unit sales of the standard gift basket for the rest of the year and for January of next year. September 260 October 250 November 270 December 350 January 170 Amber likes to have 5% of the next month’s sales needs on hand at the end of each month. This requirement was met on August 31. Two materials are needed for each fruit basket: Fruit 2 pounds Small Gifts 4 items The materials inventory policy is to have 5% of the next month’s fruit needs on hand and 30% of the next month’s production needs of small gifts. (The relatively low inventory amount for fruit is designed to prevent spoilage.) Materials inventory on August 31 met this company policy. 1. Prepare a production budget for September, October, November, and December for gift baskets. 2. Prepare a direct materials purchases budget for the two types of materials used in the production of gift baskets for the months of September, October, and November.
Amber, owner of Amber’s Flowers and Gifts, produces gift baskets for various special occasions. Each gift
basket includes fruit or assorted small gifts (e.g., a coffee mug, deck of cards, novelty cocoa mixes, scented
soap) in a basket that is wrapped in colorful cellophane. Amber has estimated the following unit sales of the
standard gift basket for the rest of the year and for January of next year.
September 260
October 250
November 270
December 350
January 170
Amber likes to have 5% of the next month’s sales needs on hand at the end of each month. This requirement was met on
August 31. Two materials are needed for each fruit basket:
Fruit 2 pounds
Small Gifts 4 items
The materials inventory policy is to have 5% of the next month’s fruit needs on hand and 30% of the next month’s
production needs of small gifts. (The relatively low inventory amount for fruit is designed to prevent spoilage.) Materials
inventory on August 31 met this company policy.
1. Prepare a production budget for September, October, November, and December for gift baskets.
2. Prepare a direct materials purchases budget for the two types of materials used in the production of gift baskets for the
months of September, October, and November.
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