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In: Accounting

Varney Company makes rolling suitcases. Its sales budget for four months is: Sales Month                           &nbs

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

Answer 3.1.

Desired Ending Inventory of Suitcases for April = 12,000

Answer 3.2.

Budgeted Production of Suitcases for April = 26,000

Answer 3.3.

Desired Ending Inventory of Nylon for March = 7,800 meters

Answer 3.4.

Budgeted meters of Nylon to be purchased in March = 20,900

Answer 3.5.

Desired Ending Inventory of Nylon for March = 10,400 meters

ekkarill92 answered 1 year ago
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