question 2

assignment 5

Symphony Electronics produces wireless speakers for outdoor use on patios, decks, etc. Their most popular model is the All Weather and requires four separate XL12 components per unit. The company is now planning raw material needs for the second quarter. Sales of the All Weather are the highest in the second quarter of each year as customers prepare for the summer season. The company has the following inventory requirements:

1. The finished goods inventory on hand at the end of each month must be equal to 16,000 units plus 10% of the next months sales. The finished goods inventory on March 31 is budgeted to be 28,000 units.
2. The raw materials inventory on hand at the end of each month must be equal to 20% of the following months production needs for raw materials. The raw materials inventory on March 31 for XL 12 is budgeted to be 98,400 components.
3. The company maintains no work in process inventories.

A sales budget for the All Weather speaker is as follows:

	Budgeted Sales in Units
April		120,000
May		150,000
June		210,000
July		106,000
August		60,000

Required: 1. Prepare a production budget for the All Weather for April, May, June and July.

2. Prepare a direct materials purchases budget showing the quantity of XL 12 components to be purchased for April, May and June and for the quarter in total.