Question

Help Pls. 2 Part Question.

Blossom Company makes and sells artistic frames for pictures. The controller is responsible for preparing the master budget and has accumulated the following information for 2020 January February March April May 10.400 11.500 8.900 8.700 8.500 $50.00 $48.30 $48.30 $48.30 $48.30 Estimated sales Sales priceperunt Direct labor hours per unit Wage per direct labor hour 58 58 58 59 $9 Blossom has a labor contract that calls for a wage increase to $9 per hour on April 1. New labor saving machinery has been installed and will be fully operational by March 1 Blossom expects to begin the year with 16,150 frames on hand and has a policy of carrying an end-of-month inventory of 100% of the following months sales, plus 50% of the second following month's sales Prepare a production budget for Blossom Company by month and for the first quarter of the year. BLOSSOM COMPANY Production Budget

Answer 1

Solution

Blossom Company

Production Budget

	Blossom Company
	Production Budget
	For the First Quarter of the Year 2020
	January	February	March	Total
Estimated unit sales	10,400	11,500	8,900	30,800
Add: ending inventory, 100% of next month's sales	11,500	8,900	8,700	8,700
Add: ending inventory, 50% of second following month's sales	4,450	4,350	4,250	4,250
total ending inventory	15,950	13,250	12,950	12,950
Total production requirement	26,350	24,750	21,850	43,750
Less: Beginning inventory	16,150	15,950	13,250	16,150
Production units	10,200	8,800	8,600	27,600

Computations:

1. Ending inventory, 50% of second following month’s sales –

For January = 50% of sales units of march = 50% x 8,900 = 4,450

For February = 50% of sales units of April = 50% x 8700 = 4,350

For March = 50% of sales units of May = 50% x 8,500 = 4,250

2. Total production requirement = estimated unit sales plus total ending inventory
3. Beginning inventory = ending inventory of previous month

January = given in Question = 16,150

February = ending inventory of January = 15,950

March = ending inventory of February = 13,250