Simmons Enterprises is a boutique guitar manufacturer. The company produces both acoustic and electric guitars for rising and established professional musicians. Vanessa Aaron, the company's sales manager, prepared the following sales forecast for 2018. The forecasted sales prices include a 5% increase in the acoustic guitar price and a 10% increase in the electric guitar price, to cover anticipated increases in raw materials prices.

Required
a. Prepare Simmons's sales budget for 2018.
b. On December 31, 2017, Simmons had 30 acoustic guitars in stock-fewer than the desired inventory level of 80 guitars, based on the following quarter's sales. The company has budgeted for sales of 240 acoustic guitars in the first quarter of 2019.
Prepare the 2018 production budget for acoustic guitars.
c. Each acoustic guitar requires a maple neck blank, which Simmons purchases for $45. On December 31, 2017, Simmons had 400 neck blanks in inventory. Spoilage during the production process results in a standard quantity of 1.5 necks per acoustic guitar. Because of recent delivery problems, Simmons wants to maintain an ending inventory equal to 50% of the following quarter's production needs. Since the supplier has assured Simmons that the delivery issues will be resolved by the end of December, Simmons wants only 150 neck blanks in inventory on December 31, 2018. Prepare the purchases budget for neck blanks for 2018.

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Sales Price 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Acoustic guitar sales $1,250 Electric guitar sales$2,400 200 400 280 350 325 360 320