Question
In: Accounting
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 |
|
If any doubt please comment.If you are satisfie d please rate |
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