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	11,000	90,000
Second quarter	14,500	88,200
Third quarter	16,800	92,000
Fourth quarter	20,000	91,800

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:

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.

Archer Company Sales Budget For the Year Ended December 31

	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Year
Custom:
Units
Unit price	$	$	$	$	$
Sales	$	$	$	$	$
Basic:
Units
Unit price	$	$	$	$	$
Sales	$	$	$	$	$
Total Sales	$	$	$	$	$

2. Prepare a separate production budget for each product for each of the first three quarters of the year.

Production budget for customs:

Archer Company Production Budget for Customs First Three Quarters of the Year

	Quarter 1	Quarter 2	Quarter 3
Unit sales
Desired ending inventory
Total needed
Less: Beginning inventory
Units produced

Production budget for basics:

Archer Company Production Budget for Basics First Three Quarters of the Year

	Quarter 1	Quarter 2	Quarter 3
Unit sales
Desired ending inventory
Total needed
Less: Beginning inventory
Units produced