Question

Wright Lighting Fixtures forecasts its sales in units for the next four months as follows:

March	7,000
April	9,000
May	6,500
June	5,000

Wright maintains an ending inventory for each month in the amount of one times the expected sales in the following month. The ending inventory for February (March’s beginning inventory) reflects this policy. Materials cost $4 per unit and are paid for in the month after production. Labor cost is $8 per unit and is paid for in the month incurred. Fixed overhead is $12,500 per month. Dividends of $20,100 are to be paid in May. The firm produced 6,000 units in February.

Complete a production schedule and a summary of cash payments for March, April, and May. Remember that production in any one month is equal to sales plus desired ending inventory minus beginning inventory.

	Wright Lighting Fixtures Production Schedule March April May June Projected unit sales 7,000 9,000 6,500 5,000 Desired ending inventory 9,000 6,500 5,000 Total units required 16,000 15,500 11,500 Beginning inventory Units to be produced 16,000 15,500 11,500

	Cash Payments February March April May Units produced Material cost Labor cost Fixed overhead Dividends Total cash payments $0 $0 $0

Answer 1