Question

Iron Forge manufactures and sells a cast iron garden chair. The marketing department prepared the following quarterly sales forecast.

January 250 units

February 300 units

March 350 units

Total 900 units

The company tries to maintain 15% of the next month's forecasted sales in finished chairs inventory. January's beginning inventory to finished chair was 38 units. April and May sales are expected to be 400 chairs each month. Each chair requires 4 composite feet which are purchased from a vendor. The company tries to maintain 12% of the next month's forecasted production needs in feet inventory. January's beginning inventory for feet was 123.

Required:

A. Prepare a monthly production budgets for the first quarter. Include a total column.

B. Prepare a monthly materials purchases budget for chairs for the first quarter. Include a total column.

Answer 1

My all Calculations are rounded off to whole number if you need decimal calculations kindly mention in comment section i will post decimal calculations

Answer A Production Budget for the 1st Quarter

Iron Forge Manufacturers
Production Budget for 1st Quarter
Production Requirement	January	February	March
Sale	250	300	350
Add: Ending Units 15% of next month sale	45	53	60
Total Units available for sale	295	353	410
Less: Opening units	38	45	53
Production Required	257	308	357

Answer B Material Purchase Budget for the 1st Quarter

Iron Forge Manufacturers
Material Purchase Budget for 1st Quarter
	January	February	March
Production Required	257	308	357
Each unit require 4 Composite feet	4	4	4
Composite Feet Required	1028	1232	1428
Add: Ending Inventory@ 12% of next Month Production	148	171	192
Total Composite feet require	1176	1403	1620
Less: Opening Inventory	123	148	171
Units To be purchased	1053	1256	1449

Above two budgets are calculated on the basis of below noted calculations and table

Production Requirement	January	February	March	April	May
Sale	250	300	350	400	400
Add: Ending Units 15% of next month sale	45	53	60	60
Total Units available for sale	295	353	410	460
Less: Opening units	38	45	53	60
Production Required	257	308	357	400
Calculation Purchase of Raw material Requirement
	January	February	March	April	May
Production Required	257	308	357	400
Each unit require 4 Composite feet	4	4	4	4
Composite Feet Required	1028	1232	1428	1600
Add: Ending Inventory@ 12% of next Month Production	148	171	192
Total Composite feet require	1176	1403	1620
Less: Opening Inventory	123	148	171
Units To be purchased	1053	1256	1449

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