Question
A sales budget is given below for one of thefoodproducts(Food X)manufactured by the KeyFood Company: January20,000 units February35,000 March60,000 April40,000 May30,000 June25,000 The inventory of
A sales budget is given below for one of thefoodproducts(Food X)manufactured by the KeyFood Company:
January20,000 units
February35,000
March60,000
April40,000
May30,000
June25,000
The inventory of finished goods at the end of each month must equal 20% of the next month's sales. On December 31, the finished goods inventory totaled 4,000 units.
Each unit offoodproduct requires threestrawberries. Since thedeliveryof thesestrawberriesby Key's suppliers is sometimes irregular, the company has a policy of maintaining an ending inventory at the end of each month equal to 30% of the next month's production needs. This requirement had been met on January 1 of the current year.
(a) Prepare production budget of the food
(b) Prepare budget showing the quantity of strawberries to be purchased each month for January, February, and March and in total for the quarter.
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