Question

Crane Enterprises is a boutique guitar manufacturer. The company produces both acoustic and electric guitars for rising and established professional musicians. Betty Harris, the company’s sales manager, prepared the following sales forecast for 2022. The forecasted sales prices include a 5% increase in the acoustic guitar price and a 10% increase in the electric guitar price, to cover anticipated increases in raw materials prices.

		Sales Price			1st Quarter			2nd Quarter			3rd Quarter			4th Quarter
Acoustic guitar sales		$1,350			200			280			320			330
Electric guitar sales		$2,050			400			350			320			360

C)

Each acoustic guitar requires a maple neck blank, which Crane purchases for $39. On December 31, 2021, Crane had 200 neck blanks in inventory. The production process results in a standard quantity of 1 neck per acoustic guitar. Because of recent delivery problems, Crane wants to maintain an ending inventory equal to 50% of the following quarter’s production needs. Since the supplier has assured Crane that the delivery issues will be resolved by the end of December, Crane wants only 150 neck blanks in inventory on December 31, 2022. Prepare the purchases budget for neck blanks for 2022.

Answer 1