Question

Sam Montana Bookcases (SMB) manufactures bookcases for sale to colleges and universities for use in dorm rooms. Each bookcase sells for $65. Due to the cyclical nature of the business, the company budgets two months ahead. In early May, company managers are planning for July, the company’s busiest month. In July, SMB plans to sell 114,500 bookcases. At the end of June, the company expects to have 26,000 assembled bookcases in its inventory. It also plans to have 560,000 board feet of lumber (cost $6,720,000), 75,000 quarts of stain (cost $300,000), and 160,000 board feet of trim (cost $2,400,000) in inventory. At the end of July, the company would like to have 3,000 assembled bookcases, 120,000 board feet of lumber, 4,500 quarts of stain, and 12,000 board feet of trim on hand. What is SMB’s budgeted production for July?

Answer 1

The correct answer

SMB's Budgeted Production for July = 91500 Book cases

Calculation

Budgeted Production = desired ending inventory for july month + sales for july month- beginning inventory for july month

= 3000+114500-26000

= 91500 Book cases