Question: The Good and Old Company manufactures antique looking, oak rocking chairs. Budgeted sales for the first five (5) months of the year are as follows:
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Budgeted Sales (Units)
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January
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200
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February
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240
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March
|
180
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April
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160
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|
May
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240
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Every rocking chair requires 10 square feet of oak, at a cost of dollar 20 per square foot.
The firm wants to maintain an inventory of chairs equal to 25% of the following month's sales. At the starting of the year, 40 chairs are on hand.
The firm wants to maintain an inventory of chairs equal to 25% of the following month's sales. At the starting of the year, 40 chairs are on hand.
Required:
[A] Make a production budget, in units, for each of the first four months of the year.
[B] Make a direct materials budget, in dollars ($), for each of the 1st three (3) months of the year.