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The Hidalgo Co. in Mexico has a division that manufactures bicycles. Its budgeted sales for Model XG in 2021 are 96,000 units. Hidalgo's target
The Hidalgo Co. in Mexico has a division that manufactures bicycles. Its budgeted sales for Model XG in 2021 are 96,000 units. Hidalgo's target ending inventory is 8,000 units, and its beginning inventory is 13,000 units. The company's budgeted selling price to its distributors and dealers is 3,300 pesos per bicycle. Hidalgo buys all its wheels from an outside supplier. No defective wheels are accepted. A separate division of the company orders the extra wheels Hidalgo needs for replacement parts. The company's target ending inventory is 10,000 wheels, and its beginning inventory is 15,000 wheels. The budgeted purchase price is 100 pesos per wheel. Read the requirements Requirement 1. Compute the budgeted revenues in pesos. Model XG Budgeted units Budgeted selling price per unit Total budgeted revenues Requirement 2. Compute the number of bicycles that Hidalgo should produce. Budgeted sales in units Add target ending finished goods inventory Total required units Deduct beginning finished goods inventory Units of finished goods to be produced Requirement 3. Compute the budgeted purchases of wheels in units and in pesos. Direct materials to be used in production - number of wheels Add target ending inventory - number of wheels Total requirement - number of wheels Deduct beginning inventory - number of wheels Purchases to be made - number of wheels Cost per wheel in pesos Purchases cost in pesos Requirement 4. What actions can Hidalgo's managers take to reduce budgeted purchasing costs of wheels assuming the same budgeted sales for Model XG? (Select all that apply.) A. Hidalgo's managers could check if the target ending inventory of wheels could be increased further. B. Hidalgo could help improve quality, efficiency, and productivity of its wheel supplier. C. Hidalgo's managers could check if the target ending inventory of wheels could be reduced further. D. Hidalgo could increase the selling price of each bicycle to its distributers and dealers.
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