ase: Head Start Audio Inc.: Breaking Down Budgets, One Headphone at a Time!

Welcome to Head Start Audio Inc., where the finest audio headphones are crafted with

premium materials and top$-$notch production. As our new budgeting analyst, you$$re responsible

for preparing budgets and analyzing variances over the first quarter. Use the information below

to guide your calculations and create accurate projections and variance analyses.

Deliverables:

$$ Master Budget by month and for the quarter.

$$ Flexible Budget using quarterly totals.

$$ Activity and Spending$/$Revenue Analysis.

$$ Variance calculations and explanations for Sales Revenue, DM$,$ and DL$.$

Phase $1$: Master Budget Preparation

$1.$ Sales and Production Budget:

o Forecasted Sales $($units$)$:

$$ January: $5,000$

$$ February: $5,500$

$$ March: $6,000$

o Desired Ending Inventory: $10\%$ of the following month$$s sales.

o Beginning Inventory $($January$)$: $500$ units.

o Calculate the production needs for each month, considering forecasted sales and

inventory