Question

Production Budget Assume that Stillwater Designs produces two automotive subwoofers: S12L7 and 512L5. The S12L7 sells for $475, and the S12L5 sells for $300. Projected sales (number of speakers) for the coming five quarters are as follows: S12L7 S12L5 First quarter, 2011 960 1,560 2,640 1,680 6,720 Second quarter, 2011 Third quarter, 2011 Fourth quarter, 2011 First quarter, 2012 6,360 5,520 4,680 1,080 1,440 The vice president of sales believes that the projected sales are realistic and can be achieved by the company. Stillwater Designs needs a production budget for each product (representing the amount that must be outsourced to manufacturers located in Asia). Beginning inventory of S12L7 for the first quarter of 2011 was 340 boxes. The company's policy is to have 20% of the next quarter's sales of S12L7 in ending Inventory. Beginning inventory of S12L5 was 170 boxes. The company's policy is to have 30% of the next quarter's sales of S12L5 in ending inventory Required: Prepare a production budget for each quarter for 2011 and for the year in total Stillwater Designs Production Budget for S12L7 For the Year Ended December 31, 2011 1st Qtr 2nd Otr. 3rd Qtr. 4th Otr. Year

Answer 1

Page 6 DATE PAGE Stillwater a Production Budget for for the year ending S12L7 December 31, 2011 us Year 1st Quarter and Quarter god Quarter on 4th Quarter 15840 Sales Desired ending inventory 960 2640 x20% =528 2040 6720 20% - 1344 6720 5520 20% = 1104 5520 1080 20% = 216 3192 Total needs 1488 3984 7824 5736 a 19032 Leno: Beginning Inventory 340 Inventor 528 1344 lloy 3316 Unit Produud 1148 3456 6480 4632 15716

Stillwater Designs Production Budget for S12L5 for the year ended December 31, 2011 as Year pst - tunera Quarter Quarter ged Quarter on 4th Quarter & sales 1560 1680 6360 4680 14280 A Desired Ending Inventory 1680 x 30% = 504 6360 30% = 1908 4680 X 30% - 1404 1440 x 30% = 432 4248 Total Needs 2064 3588 7769 5112 18528 Less e Beginning Inventory a S - 170 out ou 504 1908 1404 3986 Units Produced 1894 3084 5856 3708 14542