Required information A master budget is a collection of component budgets. From budgeted sales a manufacturer prepares a production budget. A manufacturing budget shows the budgeted production costs for direct materials, direct labor, and overhead. Selling and general and administrative expense budgets complete the operating budgets of the master budget. The capital expenditures budget reflects expected and asset purchases and disposals. The cash budget shows the impact of budgeted activities on cash. TORONTO STICKS COMPANY Production Budget October - December October November December Next month's budgeted sales (units) from Soles budget* 800 1,400 900 Ratio of inventory to future sales 90% X 90% X 90% Budocted ending inventory (units) 720 1,260 810 Add: Budgeted sales (units) 1,000 800 1,400 Required units of available production 1,720 2,060 2,210 Deducti Beginning Inventory (units) 1,010 720 1,260 Units to be produced 710 1,340 950 * From Sales fludet: January budgeted sales of 900 units from next Quarter's sales budget Odoor beginning inventory (1,010 ) la inconsistent with company policy Units to produce Budgeted ending Inventory units + Budgeted sales units Beginning finished goods inventory units Required for perto Knowledge Check 01 Feline Watch Company makes wrist watches out of silver metal sheets, Feline sold 200 watches in the month of June. It projects July and August sales to be 400 and 600 respectively. The company's policy is to have 50% of next month's soles in inventory, the June ending inventory of watches is 200, how many watches must be produced in July? 300 400 500 700