A. Sales Budget
July | August | September | |
Sales(in sets)........................... | 10,000 | 12,000 | 15,000 |
Sales price per set................... | * $40 | * $40 | * $40 |
Sales revenue.......................... | $400,000 | $480,000 | $600,000 |
B. Production Budget(in sets)
July | August | September | |
Sales....................................................... | 10,000 | 12,000 | 15,000 |
Add: Desired ending inventory................ | 2,400 | 3,000 | 3000 |
Total requirements.................................. | 12,400 | 15,000 | 18,000 |
Less: Projected beginning inventory....... | 2,000 | 2,400 | 3,000 |
Planned production................................. | 10,400 | 12,600 | 15,000 |
Working notes
1. For August:
Sales = From Sales budget
Projected beginning inventory = Desired ending inventory of previous month; july
(beginning inventory of a month = ending inventory of previous month)
Desired ending inventory = 20% of semptember's sales = 15,000 * 20% = 3,000
2. For September
Sales = From sales budget
Projected beginning inventory = Desired ending inventory of August
Desired ending inventory = already available in the table
C. Raw materials purchase budget
July | August | September | |
Planned production(sets)............................................... | 10,400 | 12,600 | 15,000 |
Raw material required per set(board feet)..................... | * 10 | * 10 | * 10 |
Raw material required for production(board feet).......... | 104,000 | 126,000 | 150,000 |
Add: Desired ending inventory of RM(board feet).......... | 12,600 | 15,000 | 16,000 |
Total requirements.......................................................... | 116,600 | 141,000 | 166,000 |
Less: Projected beginning inventory of RM(board feet).. | 10,400 | 12,600 | 15,000 |
Planned purchases of raw material(board feet).............. | 106,200 | 128,400 | 151,000 |
Cost per board feet......................................................... | * $.60 | * $.60 | * $.60 |
Planned Purchases of raw material(dollars).................. | $63,720 | $77,040 | $90,600 |
Working notes
August | September | |
Projected beginning inventory | Desired ending inventory of RM of july | Desired ending inventory of RM of august |
desired ending inventory |
10% of september's production requirement of RM = 150,000 * 10% |
Already given in the table |
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