Prepare a production budget in units and then prepare a purchases budget. Remember that you will need to purchase enough materials to have the required ending inventories shown.

Styles Text Box Harvey Manufacturing manufactures and sells two industrisl products: a self-balancing screw driver and a self- balancing saw. Both products are manufactured in a single plant. Harvey's general manager, Mr. Lipscomb, and president, Mr. Owens, want a budget prepared for each quarter of the fiscal year 2018. They have asked various employees to gather information that they believe will be necessary for preparation of a budget. The information is presented below. Neither Mr. Lipscomb nor Mr. Owens is skilled in budget preparation. Both executives have used budgets and have participated to some degree in budget preparation in prior years, but neither has prepared a full budget Sales in units ond selling price (SP) in dollars per unit Historical sales for 2017 for each of the two produets are shown below. (There is a typo in the budget, 2012. Please replace with 2017.) Product Salles for 2012 Units Units 20 100 13,500 118 ebruary20 0003,000 120 19 500 9823,500122 19000 10022,000129 21,500100 13,000 125 22,000 102 34,000130 22,000 10215,000130 August20,000 10234,500 330 September 1950010013,500 125 October19,0000013,000 125 November19000100 12,500125 December18,00O 100 12,500 125 January March May June July Harvey's sales typically peak in the summer months, beginning with May. Harvey's general manager, Mr. Lipscomb, recommends that the budget be prepared with the units sold in the high sales months of May, June and July be used as the bases for determining the annual forecast. Mr. Lipscomb's recommendation is that annual sales be budgeted at 22.000 units per month 'or screwdrivers and 15,000 units per month for saws. Mi. Lipscomb also believes that the budgeted selling price per unit should be equal to the highest selling price that could be achieved in 2017. He would like to budget $202 per unit for screwdrivers and $130 per unit for saws. Mr Lipscomb states that his management team experimented with pricing in the prior year, beginning with the first month of the year You review the unit sales and uni't seling price information or 20:7 and recommend a budget based on 60, units of screwdrivers at $100 each and 40,000 units of saws at $:25 each. Mr. Lipscomb challenges your Print Layout View Sec I Pages 2 of 86% erm