Galvin Company produces a variety of rolling briefcases. Two popular types are the road warrior and the prepster. The road warrior, meant for business people who travel frequently, sells for $50, and the prepster, a new model designed for school children, sells for $30. Projected sales of the two types of brief cases for the coming four quarters are as follows:

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 road warriors and 1,170 prepsters were in inventory on January 1. Company policy dictates that ending inventory should equal 20 percent of the next quarter’s sales for road warriors and 10 percent of next quarter’s sales for prepsters.

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 Galvin 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:

Road Warrior Prepster First quarter 15,000 84,000 Second quarter 16,500 24,500 Third quarter 20,000 98,000 Fourth quarter 25,500 35,000