Question

Wright Lighting Fixtures forecasts its sales in units for the next four months as follows:

March	27,000
April	29,000
May	26,500
June	25,000

Wright maintains an ending inventory for each month in the amount of one times the expected sales in the following month. The ending inventory for February (March’s beginning inventory) reflects this policy. Materials cost $4 per unit and are paid for in the month after production. Labor cost is $8 per unit and is paid for in the month incurred. Fixed overhead is $22,500 per month. Dividends of $22,100 are to be paid in May. The firm produced 26,000 units in February.

Complete a production schedule and a summary of cash payments for March, April, and May. Remember that production in any one month is equal to sales plus desired ending inventory minus beginning inventory.

Wright Lighting Fixtures Production Schedule April May June Projected unit sales Desired ending inventory Total units required Beginning inventory Units to be produced

Answer 1

June 25,000 Projected unit sales Desired ending inventory Total units required Beginning inventory Units to be produced Wright Lighting Fixtures Production Schedule March April 27,000 29,000 29,000 26,500 56,000 55,500 27,000 29,000 29,000 26,500 May 26,500 25,000 51,500 26,500 25,000 Units produced Material cost Labor cost Fixed overhead Dividends Total cash payments Wright Lighting Fixtures Cash Payments February March 26,000 29,000 $ 104,000 $ $ 232,000 $ $ 22,500 $ April 26,500 116,000 $ 212,000 $ 22,500 $ $ 350,500 $ May 25,000 106,000 200,000 22,500 22,100 350,600 $ 358,500 $