Question

Malarie has developed a line of frozen lemonade in convenient 1-cup sized cans, which she sells to other little kids who want to set up lemonade stands. Her projected sales for the upcoming quarter are as follows:

Projected Sales:

April: 1000 cups . May: 1200 cups . June:1500

In addition, she estimates July sales of 2,000 cans. The following information is available:                             

1. The sales price is estimated to be $3 per cup (can actually). She collects 70% of her sales in cash, and collects the remaining 30% (accounts receivable) in the month following.

3. Malarie wishes to maintain safety stock of completed lemonades ONLY. She uses a JIT system for all materials. All cans of lemonades are finished right after they are started and, therefore, there is never any work-in-process inventory.

4. For the completed lemonades, she maintains 20% of next month’s estimated sales. Beginning inventory as of April 1 was 200 cans. CREATE A PRODUCTION BUDGET

Answer 1

SOLUTION:

PRODUCTION BUDGET
	April	May	June	Total
Sales	1,000	1,200	1,500	3,700
Add: Desired ending inventory	240	300	400	400
Less: Beginning inventory	200	240	300	200
Total	1,040	1,260	1,600	3,900