Simmons Enterprises is a boutique guitar manufacturer. The company produces both acoustic and electric guitars for rising and established professional musicians. Vanessa Aaron, the company’s sales manager, prepared the  following sales forecast for 2022. The forecasted sales prices include a 5% increase in the acoustic guitar  price and a 10% increase in the electric guitar price, to cover anticipated increases in raw materials prices.

Required

a. Prepare Simmons’s sales budget for 2022.

b. On December 31, 2021, Simmons had 30 acoustic guitars in stock—fewer than the desired inventory  level of 80 guitars, based on the following quarter’s sales. The company has budgeted for sales of 240  acoustic guitars in the first quarter of 2023. Prepare the 2022 production budget for acoustic guitars.

c. Each acoustic guitar requires a maple neck blank, which Simmons purchases for $45. On December 31,  2021, Simmons had 200 neck blanks in inventory. The production process results in a standard  quantity of 1 neck per acoustic guitar. Because of recent delivery problems, Simmons wants to  maintain an ending inventory equal to 50% of the following quarter’s production needs. Since the  supplier has assured Simmons that the delivery issues will be resolved by the end of December,  Simmons wants only 150 neck blanks in inventory on December 31, 2022. Prepare the purchases  budget for neck blanks for 2022.

Transcribed Image Text:

Sales Price 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Acoustic guitar sales Electric guitar sales $1,250 200 280 300 330 $2,400 400 350 320 360