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Chow Corporation manufactures children's chairs made PVS of plastic tubing and heavy canvas material. Each chair...

Chow Corporation manufactures children's chairs made PVS of plastic tubing and heavy canvas material. Each chair requires eight feet of the PVC tubing and three yards of material. Budgeted sales are 20,000 chairs for June, 25,000 chairs for July and 30,000 chairs for August. Ending finished goods inventory is budgeted at 10% of the current month's sales. En materials inventories are budgeted at 10% of the current month's production. Prepare a production budget for each of the months of June, July and August. Assume the beginning inventory of chairs in June will be 2, 500 units. Prepare schedules showing purchase requirements for PVC tubing and for material for each of the months of June, July and August. Assume 16,000 feet of PVC tubing and 6,000 yards of material are on hand at the beginning of June.

Solutions

Expert Solution

ans Production Budget
June July August
Budgeted Unit sales B 20000 25000 30000
Add: desired Ending Inventory 10% *B 2000 2500 3000
Total needs 22000 27500 33000
Less: beginning Inventory 2500 2000 2500
Required production 19500 25500 30500
PVC Tubing-Purchase Budget
June July August
Budgeted production 19500 25500 30500
Feet of PVC tubing required per chair 8 8 8
Total PVC feet required P 156000 204000 244000
Add: Desired Ending inventory (10%*P) 15600 20400 24400
Total feets needed 171600 224400 268400
Less: beginning Inventory 16000 15600 20400
Required feet of PVC tubing to be purchased 155600 208800 248000
Material
June July August
Budgeted production 19500 25500 30500
yard of material required per chair 3 3 3
Total material required P 58500 76500 91500
Add: Desired Ending inventory (10%*P) 5850 7650 9150
Total feets needed 64350 84150 100650
Less: beginning Inventory 6000 5850 7650
Material to be purchased 58350 78300 93000

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