Question: Nebo Company makes and sells two products: leather and vinyl briefcases. The sales forecasts for these briefcases for the next four quarters are as follows:
Leather Vinyl
Briefcases Briefcases
First quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 90
Second quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 180
Third quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270 228
Fourth quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288 144
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 798 642
On January 1, Nebo has a stock of 80 completed leather briefcases and 60 vinyl briefcases. Experience indicates that Nebo must maintain an inventory equal to one-half of the next quarter's sales.
Required:
Question 1. How many leather and vinyl briefcases must be produced during each of the first three quarters to meet sales and inventory demands?
Question 2. Interpretive Question: Assume Nebo is a wholesale merchandising company instead of a manufacturing company. How would the budget information provided in part (1) change?