13-29. Estimate Inventory Levels Using Production Budgets Flex-Tite manufactures plastic parts. The inventory policy at Flex-Tite is to hold inventory equal to 130 percent of the average monthly sales for its main product. Sales for the following year are expected to be 900,000 units. Based on the inventory policy, the budget calls for the production of 930,000 units. Required What is the beginning inventory of the component?

13-29. Estimate Inventory Levels Using Production Budgets Flex-Tite manufactures plastic parts. The inventory policy at Flex-Tite is to hold inventory equal to 130 percent of the average monthly sales for its main product. Sales for the following year are expected to be 900,000 units. Based on the inventory policy, the budget calls for the production of 930,000 units. Required What is the beginning inventory of the component?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

Section: Chapter Questions

Problem 15E: Palmgren Company produces consumer products. The sales budget for four months of the year is...

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Play-Disc makes Frisbee-type plastic discs. Each 12-inch diameter plastic disc has the following manufacturing costs: For the coming year, Play-Disc expects to make 300,000 plastic discs, and to sell 285,000 of them. Budgeted beginning inventory in units is 16,000 with unit cost of 4.75. (There are no beginning or ending inventories of work in process.) Required: 1. Prepare an ending finished goods inventory budget for Play-Disc for the coming year. 2. What if sales increased to 290,000 discs? How would that affect the ending finished goods inventory budget? Calculate the value of budgeted ending finished goods inventory.
One Device makes universal remote controls and expects to sell 500 units in January, 800 in February, 450 in March, 550 in April, and 600 in May. The required ending inventory is 20% of the next months sales. Prepare a production budget for the first four months of the year.
Palmgren Company produces consumer products. The sales budget for four months of the year is presented below. Company policy requires that ending inventories for each month be 25 percent of next months sales. At the beginning of July, the beginning inventory of consumer products met that policy. Required: Prepare a production budget for the third quarter of the year. Show the number of units that should be produced each month as well as for the quarter in total.
Blue Book printing is budgeting sales of 25,000 units and already has 5,000 in beginning inventory. How many units must be produced to also meet the 7,000 units required in ending inventory?
The sales department of Macro Manufacturing Co. has forecast sales for its single product to be 20,000 units for June, with three-quarters of the sales expected in the East region and one-fourth in the West region. The budgeted selling price is 25 per unit. The desired ending inventory on June 30 is 2,000 units, and the expected beginning inventory on June 1 is 3,000 units. Prepare the following: a. A sales budget for June. b. A production budget for June.
Operating Budget, Comprehensive Analysis Allison Manufacturing produces a subassembly used in the production of jet aircraft engines. The assembly is sold to engine manufacturers and aircraft maintenance facilities. Projected sales in units for the coming 5 months follow: The following data pertain to production policies and manufacturing specifications followed by Allison Manufacturing: a. Finished goods inventory on January 1 is 32,000 units, each costing 166.06. The desired ending inventory for each month is 80% of the next months sales. b. The data on materials used are as follows: Inventory policy dictates that sufficient materials be on hand at the end of the month to produce 50% of the next months production needs. This is exactly the amount of material on hand on December 31 of the prior year. c. The direct labor used per unit of output is 3 hours. The average direct labor cost per hour is 14.25. d. Overhead each month is estimated using a flexible budget formula. (Note: Activity is measured in direct labor hours.) e. Monthly selling and administrative expenses are also estimated using a flexible budgeting formula. (Note: Activity is measured in units sold.) f. The unit selling price of the subassembly is 205. g. All sales and purchases are for cash. The cash balance on January 1 equals 400,000. The firm requires a minimum ending balance of 50,000. If the firm develops a cash shortage by the end of the month, sufficient cash is borrowed to cover the shortage. Any cash borrowed is repaid at the end of the quarter, as is the interest due (cash borrowed at the end of the quarter is repaid at the end of the following quarter). The interest rate is 12% per annum. No money is owed at the beginning of January. Required: 1. Prepare a monthly operating budget for the first quarter with the following schedules. (Note: Assume that there is no change in work-in-process inventories.) a. Sales budget b. Production budget c. Direct materials purchases budget d. Direct labor budget e. Overhead budget f. Selling and administrative expenses budget g. Ending finished goods inventory budget h. Cost of goods sold budget i. Budgeted income statement j. Cash budget 2. CONCEPTUAL CONNECTION Form a group with two or three other students. Locate a manufacturing plant in your community that has headquarters elsewhere. Interview the controller for the plant regarding the master budgeting process. Ask when the process starts each year, what schedules and budgets are prepared at the plant level, how the controller forecasts the amounts, and how those schedules and budgets fit in with the overall corporate budget. Is the budgetary process participative? Also, find out how budgets are used for performance analysis. Write a summary of the interview.
Pilsner Inc. purchases raw materials on account for use in production. The direct materials purchases budget shows the following expected purchases on account: Pilsner typically pays 25% on account in the month of billing and 75% the next month. Required: 1. How much cash is required for payments on account in May? 2. How much cash is expected for payments on account in June?
All Temps has a policy of always paying within the discount period, and each of its suppliers provides a discount of 2% if paid within 10 days of purchase. Because of the purchase policy, 80% of its payments are made in the month of purchase and 20% are made the following month. The direct materials budget provides for purchases of $23,812 in February, $23,127 in March, $21,836 in April, and $28,173 in May.What is the balance in accounts payable for April 30, and May 31?
Paradise Corporation budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels (in units) are planned for next year. a. b. Raw material* Finished goods C. d. Beginning Inventory 500,000 units 520,000 units 510,000 units 570,000 units 30,000 70,000 * Three pounds of raw material are needed to produce each unit of finished product. If Paradise Corporation plans to sell 510,000 units during next year, the number of units it would have to manufacture during the year would be: Ending Inventory 40,000 60,000
Paradise Corporation budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels (in units) are planned for next year. Beginning Inventory Inventory Ending Raw material* 53,000 63,000 63,000 Finished goods 93,000 * Three pounds of raw material are needed to produce each unit of finished product. If Paradise Corporation plans to sell 545,000 units during next year, the number of units it would have to manufacture during the year would be: Multiple Choice 545,000 units 492,000 units 575,000 units 515,000 units
Benham Foundries manufactures metal components. The inventory policy at Benham is to hold inventory equal to 145 percent of the average monthly sales for its main product. Sales for the main product for the following year are expected to be 450,000 units. Based on the inventory policy, the budget calls for the production of 420,000 units. Required: What is the beginning inventory of the main product? Beginning inventory units
Oriental Lamp Co. manufactures lamps. The estimated number of lamp sales for the last three months of 2020 are as follows: Units October 10,000 November 14,000 December 13,000 Finished Goods Inventory at the end of September was 3,000 units. Ending Finished Goods Inventory is budgeted to equal 25% of the next month’s sales. REQUIRED: How many lamps should be produced in November?