ction Budget and Direct Materials Purchases Budget Jani Subramanian, owner of Jani’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. Jani has estimated the following unit sales of the standard gift basket for the rest of the year and for January of next year. September 250 October 200 November 230 December 380 January 100 Jani likes to have 5 percent 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 1 pound Small gifts 6 items The materials inventory policy is to have 5 percent of the next month’s fruit needs on hand and 30 percent 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 September 1 met this company policy. Required: 1. Prepare a production budget for September, October, November, and December for gift baskets. (Note: Round all answers to the nearest whole unit.) 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. (No
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Production Budget and Direct Materials Purchases Budget Jani Subramanian, owner of Jani’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. Jani has estimated the following unit sales of the standard gift basket for the rest of the year and for January of next year. September 250 October 200 November 230 December 380 January 100 Jani likes to have 5 percent 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 1 pound Small gifts 6 items The materials inventory policy is to have 5 percent of the next month’s fruit needs on hand and 30 percent 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 September 1 met this company policy. Required: 1. Prepare a production budget for September, October, November, and December for gift baskets. (Note: Round all answers to the nearest whole unit.) 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. (Note: Round answers to the nearest whole unit.) 3. Conceptual Connection: Why do you think there is such a big difference in budgeted units from November to December? Why did Jani budget fewer units in January than in December?
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