Pillows Unlimited makes decorative throw pillows for home use. The company sells the pillows to home dcor
Question:
Pillows Unlimited makes decorative throw pillows for home use. The company sells the pillows to home décor retailers for $14 per pillow. Each pillow requires 1.25 yards of fabric, which the company obtains at a cost of $6 per yard. The company would like to maintain an ending stock of fabric equal to 10% of the next month’s production requirements. The company would also like to maintain and ending stock of finished pillows equal to 20% of the next month sales.
Sales (in units) are projected to be as follows for the first 3 months of the year:
January | 200,000 |
February | 220,000 |
March | 230,000 |
Requirements:
1- Prepare the following budgets for the first three months of the year, as well as a summary budget for the quarter:
2- Prepare the sale budget, including a separate section that details the types of sales made. For this section, assume that 20% of the company’s pillows are cash sales, while the remaining 80% are sold on credit terms.
3- Prepare the production budget. Assume that the company anticipates selling 240,000 units in April.
4- Prepare the direct materials purchase budget assume that the company need 300,000 yards of fabric for production in April.
Mathematical Applications for the Management Life and Social Sciences
ISBN: 978-1305108042
11th edition
Authors: Ronald J. Harshbarger, James J. Reynolds