Question

Anderson Company produces decorative windows for residential and commercial applications. The company’s marketing department has prepared a sales forecast for the first eight months of 2010 based on past sales trends and expected marketing and pricing plans. The vice president of marketing believes the sales forecast is reasonable and hopes to grow sales in the coming year based partly on the marketing and pricing changes put in place during the year.
The sales forecast for 2010 is as follows:


Inventory on December 31, 2009, was budgeted at 1,500 units. The desired quantity of finished goods inventory at the end of each month in 2010 is to be equal to 15 percent of the next month’s budgeted unit sales. Each completed unit of finished product requires 1.5 gallons of a special resin. The company has determined that it needs 20 percent of next month’s raw material needs on hand at the end of each month.

Required
A. Prepare a production budget for January through June of 2010.
B. Prepare a material purchases budget for the same period, assuming that each gallon of the special resin costs$10.


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  • CreatedMarch 11, 2015
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