Question
Sad Open Flame Candle Co. decided on the following sales forecast for the months indicated. The company produces two products Body Butter and Shower Steamers
Sad Open Flame Candle Co. decided on the following sales forecast for the months indicated. The company produces two products Body Butter and Shower Steamers
Sales Forecast 2020
Details | Body Butter | Shower Steamers |
July | 3,000 units | 4,000 units |
August | 3,500 units | 4,500 units |
September | 4,000 units | 3,800 units |
October | 2,800 units | 3,200 units |
November | 3,400 units | 3,000 units |
December | 4,200 units | 4,600 units |
Notes:
- To make one unit of Body Butter three (3) units of raw material Z508 is used.
One unit of Z508 costs $70. Shower Steamers uses two (2) units of raw
material K500 which costs $60 each.
- The company has decided that raw material stocks at the end of each month
should be held equivalent to fifteen percent (15%) of the budgeted sales for
the month in question.
- During the year, the company sold one unit of Body Butter for $320, while
one unit of Shower Steamers was sold for $300.
- The decision was made that at the end of each month there should be in store
sufficient finished goods stock to meet thirty percent (30%) of the sales for the
next month.
Required:
For the period, August to November do the following:
- The sales budget for both products.
- The production budget for both products.
- The direct raw materials usage budget for both products.
- The direct raw materials purchase budget for both products.
- Briefly explain, using an example what is meant by a "limiting budget factor".
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started