Question
Sales and Production Budgets Archer Company produces two products: the custom and the basic. The custom sells for $30, and the basic sells for $8.
Sales and Production Budgets
Archer Company produces two products: the custom and the basic. The custom sells for $30, and the basic sells for $8. Projected sales of the two models for the coming four quarters are given below.
Custom | Basic | |
First quarter | 12,000 | 90,000 |
Second quarter | 14,200 | 88,200 |
Third quarter | 16,500 | 92,000 |
Fourth quarter | 20,000 | 91,400 |
The president of the company believes that the projected sales are realistic and can be achieved by the company. In the factory, the production supervisor has received the projected sales figures and gathered information needed to compile production budgets. He found that 800 customs and 1,140 basics were in inventory on January 1. Company policy dictates that ending inventory should equal 20 percent of the next quarter's sales for customs and 10 percent of next quarter's sales for basics.
Required:
Question Content Area
1. Prepare a sales budget for each quarter and for the year in total. Show sales by product and in total for each time period.
Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 | Year | |
Custom: | |||||
Units | fill in the blank | fill in the blank | fill in the blank | fill in the blank | fill in the blank |
Unit price | $fill in the blank | $fill in the blank | $fill in the blank | $fill in the blank | $fill in the blank |
Sales | $fill in the blank | $fill in the blank | $fill in the blank | $fill in the blank | $fill in the blank |
Basic: | |||||
Units | fill in the blank | fill in the blank | fill in the blank | fill in the blank | fill in the blank |
Unit price | $fill in the blank | $fill in the blank | $fill in the blank | $fill in the blank | $fill in the blank |
Sales | $fill in the blank | $fill in the blank | $fill in the blank | $fill in the blank | $fill in the blank |
Total Sales | $fill in the blank | $fill in the blank | $fill in the blank | $fill in the blank | $fill in the blank |
Feedback Area
Feedback
The Sales Budget is the projection approved by the budget committee that describes expected sales for each product in units and dollars. The sales budget must be constructed first, before other budgets can be constructed.
Question Content Area
2. Prepare a separate production budget for each product for each of the first three quarters of the year.
Production budget for customs:
Quarter 1 | Quarter 2 | Quarter 3 | |
---|---|---|---|
Unit sales | fill in the blank | fill in the blank | fill in the blank |
Desired ending inventoryLess: Beginning inventoryUnits producedUnit salesDesired ending inventory | Desired ending inventory | Desired ending inventory | Desired ending inventory |
Total needed | fill in the blank | fill in the blank | fill in the blank |
Desired ending inventoryLess: Beginning inventoryUnits producedUnit salesLess: Beginning inventory | Less: Beginning inventory | Less: Beginning inventory | Less: Beginning inventory |
Units produced | fill in the blank | fill in the blank | fill in the blank |
Feedback Area
Feedback
Units to be produced are calculated by considering beginning and ending (desired) inventory amounts and unit sales.
Question Content Area
Production budget for basics:
Quarter 1 | Quarter 2 | Quarter 3 | |
---|---|---|---|
Unit sales | fill in the blank | fill in the blank | fill in the blank |
Desired ending inventoryLess: Beginning inventoryUnits producedUnit salesDesired ending inventory | Desired ending inventory | Desired ending inventory | Desired ending inventory |
Total needed | fill in the blank | fill in the blank | fill in the blank |
Desired ending inventoryLess: Beginning inventoryUnits producedUnit salesLess: Beginning inventory | Less: Beginning inventory | Less: Beginning inventory | Less: Beginning inventory |
Units produced | fill in the blank | fill in the blank | fill in the blank |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored 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