Problem 1

East Mountain Bike expects to sell 25,000 electronic bicycles next year. The management estimates that the beginning and ending inventory will be 2,000 units and 3,500 units, respectively.

Required:

Prepare a production budget for next year.

Problem 2

(Continued from Problem 1)

Each electronic bicycle produced at East Mountain Bike requires two major parts (frame and tires) and an electronic subassembly from its suppliers as inputs. The following information is available:

	Frame	Tires	ElectronicSubassembly
Material per bike	1	2	1
Unit cost	$900	$30	$420
Beginning inventory	1,100	2,000	950
Ending inventory	2,500	3,200	1,800

Required:

Prepare the direct material budget for next year.