Revenues, production, and purchases budgets. The Mochizuki Co. in Japan has a division that manufactures two-wheel motorcycles. Its budgeted sales for Model G in 2015 is 915,000 units. Mochizuki’s target ending inventory is 70,000 units, and its beginning inventory is 115,000 units. The company’s budgeted selling price to its distributors and dealers is 405,000 yen (¥) per motorcycle. Mochizuki buys all its wheels from an outside supplier. No defective wheels are accepted. (Mochizuki’s needs for extra wheels for replacement parts are ordered by a separate division of the company.) The company’s target ending inventory is 72,000 wheels, and its beginning inventory is 55,000 wheels. The budgeted purchase price is 18,000 yen (¥) per wheel. 1. Compute the budgeted revenues in yen. 2. Compute the number of motorcycles that Mochizuki should produce. 3. Compute the budgeted purchases of wheels in units and in yen. 4. What actions can Mochizuki’s managers take to reduce budgeted purchasing costs of wheels assuming the same budgeted sales for Model G?
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