High Flyers manufactures competition stunt kites. In November, Jerry Box prepared the following production budget for the

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High Flyers manufactures competition stunt kites. In  November, Jerry Box prepared the following production budget for the first quarter of the coming year.  Desired ending inventory is based on the following month’s budgeted sales.

Following lower-than-expected sales in December, Jerry conducted an inventory count on January 2 and  discovered that the company had 6,000 completed kites on     hand. He decided that given the slow sales  in December, the company should decrease its desired ending inventory level from 20 to 15% of the next  month’s sales volume.

Required

a. Prepare a new production budget for the first quarter.

b. What other components of the master budget will be affected by this change?

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Managerial Accounting

ISBN: 9781119577669

4th Edition

Authors: Charles E. Davis, Elizabeth Davis

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