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On December 31, 2017, Waterway had 30 acoustic guitars in stock-fewer than the desired inventory level of 84 guitars, based on the following quarter's sales.
On December 31, 2017, Waterway had 30 acoustic guitars in stock-fewer than the desired inventory level of 84 guitars, based on the following quarter's 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. Production Budget 2nd Quarter 3rd Quarter 1st Quarter 4th Quarter Annual Waterway Enterprises is a boutique guitar manufacturer. The company produces both acoustic and electric guitars for rising and established professional musicians. Vanessa Aaron, the company's sales manager, prepared the following sales forecast for 2018. The forecasted sales prices include a 5% increase in the acoustic guitar price and a 10% increase in the electric guitar price, to cover anticipated increases in raw materials prices. Acoustic guitar sales Electric guitar sales Sales Price $1,200 $2,390 1st Quarter 210 420 2nd Quarter 260 380 3rd Quarter 300 310 4th Quarter 305 340 Prepare Waterway's sales budget for 2018. Sales Budget 3rd Quarter 1st Quarter 2nd Quarter 4th Quarter Annual Acoustic: $ Electric: $ Total revenue Each acoustic guitar requires a maple neck blank, which Waterway purchases for $40. On December 31, 2017, Waterway had 390 neck blanks in inventory. Spoilage during the production process results in a standard quantity of 1.5 necks per acoustic guitar. Because of recent delivery problems, Waterway wants to maintain an ending inventory equal to 50% of the following quarter's production needs. Since the supplier has assured Waterway that the delivery issues will be resolved by the end of December, Waterway wants only 360 neck blanks in inventory on December 31, 2018. Prepare the purchases budget for neck blanks for 2018. (Enter "per guitar" value to 1 decimal place, e.g. 3.1. Round all other answers to decimal places, e.g. 153.) Purchases Budget 2nd Quarter 3rd Quarter 1st Quarter 4th Quarter Annual
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