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In: Accounting
5-10 Preparing a production budget (CMA adapted) (LO 3) Rossano, Inc., makes and sells drum sets....
5-10 Preparing a production budget (CMA adapted) (LO 3)
Rossano, Inc., makes and sells drum sets. Nick Ross, controller, is responsible for preparing the master budget. The sales manager has given Nick the following sales forecast for the coming months.
|
April |
May |
June |
July |
|||||
|
Forecasted unit sales |
12,000 |
15,000 |
10,000 |
11,000 |
Rossano expects to have 6,000 drum sets in ending inventory on March 31. The company’s policy is to carry 30% of the following month’s projected sales in ending inventory.
Required
Prepare Rossano’s production budget for the second quarter.
Solutions
Expert Solution
| Production budget: | |||
| Particulars | April | May | June |
| Sales in units | 12,000 | 15,000 | 10,000 |
| Add | |||
| Closing inventory | 4,500 | 3,000 | 3,300 |
| 15000*10% | 10000*10% | 11000*10% | |
| Total needs | 16,500 | 18,000 | 13,300 |
| Less | |||
| Opening inventory | 6000 | 4,500 | 3,000 |
| Production for the month | 10,500 | 13,500 | 10,300 |
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