Jasper Design produces and sells the fluffy lounge pillows. The pillows each sell for $32.00. Estimated sales for the fourth quarter (in units) are as follows:

October	8500
November	9200
December	11600
Total	29 300

Required

a. Prepare a production budget for the pillow manufacturing company. The company did not have any inventory at the end of September, but they want to maintain a 20 per cent inventory at the end of each month based on the next months estimated sales. Expected sales for January next year is 5 800 units.

b. Prepare a fabric purchases budget. Each pillow requires half a metre of fabric that costs, on average, $24 per metre. The company did not have any inventory of fabric at the end of September, but they want to maintain a fabric inventory equal to 10 per cent of the next months material needs. Januarys projected production is expected to be

5 820 units.

(12 + 13 = 25 marks)

ANSWER:

PRODUCTION BUDGET

	October	November	December