Bella Company produces shampoo and conditioner. Both products are sold in 8-ounce bot¬

tles. Shampoo sells for $0.90 per bottle, and conditioner sells for $1.05 per bottle. Projected sales (in bottles) 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 formd that 5,400 bottles of shampoo and 8,300 bottles of conditioner were in inventory on January 1. Company policy dictates that ending inventory should equal 10 percent of the next quarter's sales.
Required:
1. Prepare a sales budget for each quarter and for the year in total. Show sales by prod¬
uct and in total for each time period.
2. What factors might Bella Company have considered in preparing the sales budget?
3. Prepare a separate production budget for each product for each of the first three quar¬
ters of the year.

Transcribed Image Text:

Shampoo Conditioner First quarter 50,000 40,000 Second quarter 65,000 45,000 Third quarter 100,000 80,000 Fourth quarter 55,000 50,000