Question
For better view, please see attachments. Tempting Toys manufactures and distributes a number of products to retailers. One of these products, Playclay, requires two pounds
For better view, please see attachments.
| Tempting Toys manufactures and distributes a number of products to retailers. One of these products, Playclay, requires two pounds of material A135 in the manufacture of each unit. The company is now planning raw materials needs for the third quarter?July, August, and September. Peak sales of Playclay occur in the third quarter of each year. To keep production and shipments moving smoothly, the company has the following inventory requirements: |
| a. | The finished goods inventory on hand at the end of each month must be equal to 8,000 units plus 26% of the next month?s sales. The finished goods inventory on June 30 is budgeted to be as expected. |
| b. | The raw materials inventory on hand at the end of each month must be equal to one-half of the following month?s production needs for raw materials. The raw materials inventory on June 30 for material A135 is budgeted to be as expected. |
| c. | The company maintains no work in process inventories. |
| A sales budget for Playclay for the last six months of the year follows. |
| Budgeted Sales in Units | |
| July | 39,000 |
| August | 49,000 |
| September | 69,000 |
| October | 34,000 |
| November | 19,000 |
| December | 9,000 |
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Intermediate Accounting
Authors: kieso, weygandt and warfield.
14th Edition
9780470587232, 470587288, 470587237, 978-0470587287
