Question
I am struggling with a particular question and I am wondering if you could help me. Here is the question as follows: Schorg Company manufactures
I am struggling with a particular question and I am wondering if you could help me. Here is the question as follows:
Schorg Company manufactures and sells two boxed products:saltines and crisps.Estimated needs for a box of each are:
Crisps
Material A 4 pounds 2 pound
Material B 4 pounds 4 pounds
Direct labor 2 hours 2 hours
Overhead is applied on the basis of $2 per direct labor hours.The estimated sales by product for January, 2019 are 42,000 boxes of saltines and 24,000 boxes of crisps.
The beginning and ending desired inventories are expected to be as follows:
Jan. 1, 2019 Jan. 31, 2019
Material A 8,000 pounds 18,000 pounds
Material B 12,000 pounds 21,000 pounds
Saltines 2,000 boxes 7,000 boxes
Crisps 1,000 boxes 4,000 boxes
Desired ending inventories are equal to the following month's requirements, assuming constant sales throughout the year.
Here are my questions:
First, how do I make the production budget to produce saltines and crisps for the month of January?
Second, Once I have determined how many saltines and crisps you need to produce, how do I then determine how many pounds of Material A that I need to purchase and then how many pounds of Material B that I need to purchase?
My professor gave us this hint so I will include it as well since it might help you too. :D
(Hint:Keep in mind that A is used to make saltines and crisps.Therefore, your needs for Material A will depend on how much is needed to for saltines plus crisps. (12 points)Note, that the input is not the same for both products.Then, do the same for B)
Thanks so much for your help!
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