Berring Company produces two products: the deluxe and the standard. The deluxe sells for $40, and the standard sells for $10. Projected sales of the two models for the coming four quarters are given below.

The president of the company believes that the projected sales are realistic and can be achieved by the company. In the factory, the production supervisor has received the projected sales figures and gathered information needed to compile production budgets. He found that 1,300 deluxes and 1,170 standards were in inventory on January 1. Company policy dictates that ending inventory should equal 20 percent of the next quarter’s sales for deluxes and 10 percent of next quarter’s sales for standards.

                                  

Required:

1. Prepare a sales budget for each quarter and for the year in total. Show sales by product and in total for each time period.

2. What factors might Berring Company have considered in preparing the sales budget?

3. Prepare a separate production budget for each product for each of the first three quarters of the year.

Transcribed Image Text:

Deluxe First quarter Second quarter Third quarter Fourth quarter 12,000 14,300 16,600 20,000 Standard 90,000 88,400 92,000 91,600