5-31 Integrated sales budget, production budget, and purchases budget (LO 3)

Simmons Enterprises is a boutique guitar manufacturer. The company produces both acoustic and electric guitars for rising and establish professional musicians. Vanessa Aaron, the companys sales manager, prepared the following sales forecast for 2018. The forecasted sales prices include a 5% increase in the acoustic guitar price and a 10Z% increase in the electric guitar price, to cover anticipated increases in raw materials prices.

	Sales price		1st quarter		2nd quarter		3rd quarter		4th quarter
Acoustic guitar sales	$1,250		200		280		300		325
Electric guitar sales	$2,400		400		350		320		360

Required

a. Prepare Simmons sales budget for 2018.

b. On December 31, 2017, Simmons had 30 acoustic guitars in stock fewer than the desired inventory level of 80 guitars, based on the following quarters sales. The company has budgeted for sales of 240 acoustic guitars in the first quarter of 2019. Prepare the 2018 production budget for acoustic guitars.