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Sheffield manufactures competition stunt kites. In November, Chris Anderson prepared the following production budget for the first quarter of the coming year. Desired ending inventory
Sheffield manufactures competition stunt kites. In November, Chris Anderson prepared the following production budget for the first quarter of the coming year. Desired ending inventory is based on the following month's budgeted sales. March 37,000 Quarter 116,000 January 45,000 7,000 52,000 4,000 Budgeted sales Desired ending inventory Kites needed Less beginning inventory Budgeted production 2,400 February 34,000 6,000 40,000 7,000 33,000 39,400 6,000 33,400 2,400 118,400 4,000 114,400 48,000 Following lower-than-expected sales in December, Jerry conducted an inventory count on January 2 and discovered that the company had 4,000 completed kites on hand. He decided that given the slow sales in December, the company should decrease its desired ending inventory level from 20 to 15% of the next month's sales volume. (a) Prepare a new production budget for the first quarter. January February March Quarter
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