Question

Ingles Corporation is a manufacturer of tables. The table tops are manufactured by Ingles, but the table legs are purchased from an outside supplier. The Assembly Department takes a manufactured table top and attaches the four purchased table legs. It takes 16 minutes of labor to assemble a table. The company follows a policy of producing enough tables to ensure that 40 percent of next month’s sales are in the current month’s finished goods inventory. Ingles also purchases sufficient materials to ensure that the current month’s ending materials inventory is 60 percent of the following month’s direct materials required for production. Ingle’s sales budget in units for the next quarter is as follows:

July........................................................................................................ 2,450

August.................................................................................................. 2,900

September............................................................................................. 2,100

Ingle’s ending inventories in units for July 31 are as follows:

Finished goods...................................................................................... 1,900

Materials (legs)...................................................................................... 4,000

Requirements:

Prepare Ingle’s production budget for tables in August.

Prepare Ingle’s August direct materials purchases budget for table legs.

How many employees will be required for the Assembly Department in August?Fractional employees are acceptable since employees can be hired on a part-time basis.Assume a 40-hour week and a 4-week month.

Answer 1

Prepartion of Production Budget
		July	Aug	Sep
	Sales Unit	2450	2900	2100
Add:	Ending Inventory (40% of Nex Month Sales)	1160	840	0
Less	Beginning Inventory	1900	1160	840
	Production Unit	1710	2580	1260
Note : Assume : No Ending Inventory in Sept Month
Prepartion of Direct Material Budget
		July	Aug	Sep
	Production Unit	1710	2580	1260
	Raw Material/ Unit	4	4	4
	Total Raw Material require for Production	6840	10320	5040
Add	Ending Inventory	6192	3024
Less	Beginning inventory	4000	6192
	Material Purchase	9032	7152
	Computation of No. of Employees required for Assembly Department
	No. of Unit will be Procured in Sep	=	2580 Unit
	Time required/ Assemble a table	=	16 Minutes
	No. of table assembled in 1 Hour (60Min/16 Min)	=	3.75 Table
	No. of Hour require to Assemble 3300 Unti		688 Hour
	( 2580 Unit/3.75Table)
	No. of working Hour for Employee/Per month		160 hour
	( 40Hours*4week)
	Employee required for Assembley Deptt.	=	4.3 Employee
	( 688 Hour/160 hour)