Raylene Webber, owner of Raylene’s Flowers and Gifts, produces gift baskets for various special occasions. Each gift basket includes fruit and 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. Raylene has estimated the following sales of the standard gift basket for the rest of the year and January of next year.

 

                                      

Raylene likes to have 10 percent of the next month’s sales needs on hand at the end of each month. This requirement was met on August 31.

Materials needed for each basket are as follows:

Fruit                      1 pound

Small gifts               5 items

Cellophane              3 feet (cut from the roll of cellophane) Basket                     1

The materials inventory policy is to have 5 percent of the next month’s fruit needs on hand as well as 50 percent of the next month’s production needs for all other materials. (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.

2.    Prepare a direct materials purchases budget (in units only) for the four types of materials used in the production of gift baskets for the months of September, October, and November. (Round all answers to the nearest whole unit.)

3.    Why can’t you prepare a direct materials purchases budget for December?