Question
In: Accounting
Varney Company makes rolling suitcases. Its sales budget for four months is: &nb
Varney Company makes rolling suitcases. Its sales budget for four months is:
Sales
Month
R
March 15,000
April 20,000
May 40,000
June 60,000
Varney's policy is that ending inventory of finished suitcases
should equal 30% of the next
month's sales. Beginning inventory (March 1) is 5,300
suitcases.
Each suitcase required 1.5 meters of ballistic nylon. The ending
inventory policy for nylon is
that 20% of the following month's production needs must be on hand.
On March 1, Varney
had 10,450 meters of nylon in inventory.
Required:
3.1 What is the desired ending inventory of
suitcases for
April?
(1)
3.2 What is the budgeted production of suitcases for
April?
(1)
3.3 What is the desired ending inventory of nylon for
March?
(1)
3.4 What are the budgeted meters of nylon to be
purchased in
March?
(1)
3.5 Assuming each suitcase required two meters of
ballistic nylon, what is the desired ending
inventory of nylon for
March?
(1)
Solutions
Expert Solution
| A. | |||
| 12,000 (see table below) | |||
| B. | |||
| 26,000 (see table below) | |||
| March | April | May | |
| Sales | 15000 | 20000 | 40000 |
| Add: Desired EI | 6000 | 12000 | 18000 |
| Units needed | 21000 | 32000 | 58000 |
| Less: - Beginning inventory | 5300 | 6000 | 12000 |
| Production | 15700 | 26000 | 46000 |
| C. | |||
| 7,800 metres (26,000 x 1.5 x 20%) | |||
| D. | |||
| 20,900 metres (see table below) | |||
| March | April | ||
| Production | 15,700 | 26,000 | |
| x 1.5 m | 1.5 | 1.5 | |
| Nylon needed for production | 23,550 | 39,000 | |
| Add: Desired ending inventory Nylon needed | 7,800 | ||
| Nylon needed | 31,350 | ||
| Less: Beginning inventory | 10,450 | ||
| Purchases of nylon in metres | 20,900 | ||
| E. | |||
| 10,400 metres (26,000 x 2 x 20%) |
ekkarill92 answered 1 year agoRelated Solutions
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