Gertrude Products expects the following sales of its single product:
Gertrude desires an ending finished goods inventory to be equal to 10% of the next month's sales needs.July 1 inventory is projected to be 800 units.Each unit requires 5 pounds of Chemical A and 14 pounds of Chemical B.July 1 materials inventory includes 8,600 pounds of Chemical A and 76,000 pounds of Chemical B.Gertrude desires to maintain a Chemical A inventory equal to 20% of next month's production needs and a Chemical B inventory equal to 100% of next month's production needs.
a.Prepare a production budget for Gertrude for as many months as is possible.
b.Prepare a direct materials purchases budget for both Chemical A and Chemical B for the months of July through September.

Question

Gertrude Products expects the following sales of its single product:
  Gertrude desires an ending finished goods inventory to be equal to 10% of the next month's sales needs.July 1 inventory is projected to be 800 units.Each unit requires 5 pounds of Chemical A and 14 pounds of Chemical B.July 1 materials inventory includes 8,600 pounds of Chemical A and 76,000 pounds of Chemical B.Gertrude desires to maintain a Chemical A inventory equal to 20% of next month's production needs and a Chemical B inventory equal to 100% of next month's production needs.
a.Prepare a production budget for Gertrude for as many months as is possible.
b.Prepare a direct materials purchases budget for both Chemical A and Chemical B for the months of July through September.

Quizplus · Accepted Answer

The Answer of Gertrude Products expects the following sales of its single product:
  Gertrude desires an ending finished goods inventory to be equal to 10% of the next month's sales needs.July 1 inventory is projected to be 800 units.Each unit requires 5 pounds of Chemical A and 14 pounds of Chemical B.July 1 materials inventory includes 8,600 pounds of Chemical A and 76,000 pounds of Chemical B.Gertrude desires to maintain a Chemical A inventory equal to 20% of next month's production needs and a Chemical B inventory equal to 100% of next month's production needs.
a.Prepare a production budget for Gertrude for as many months as is possible.
b.Prepare a direct materials purchases budget for both Chemical A and Chemical B for the months of July through September.

Gertrude Products Expects the Following Sales of Its Single Product