Upload preview

$$ Diane Buswell is preparing the

$2$

$0$

$2$

$2$

$$budget for one of Current Designs' rotomolded kayaks. Extensive meetings with members of the sales department and executive team have resulted in the following unit sales projections for

$2$

$0$

$2$

$2$

$.$

Quarter

$1$

$1$

$,$

$3$

$0$

$0$

$$kayaks

Quarter

$2$

$2$

$,$

$1$

$0$

$0$

$$kayaks

Quarter

$3$

$9$

$0$

$0$

$$kayaks

Quarter

$4$

$9$

$0$

$0$

$$kayaks

Current Designs' policy is to have finished goods ending inventory in a quarter equal to

$3$

$0$

$\%$

$$of the next quarter's anticipated sales.

Preliminary sales projections for

$2$

$0$

$2$

$3$

$$are

$1$

$,$

$1$

$0$

$0$

$$units for the first quarter and

$2$

$,$

$1$

$0$

$0$

$$units for the second quarter. Ending inventory of finished goods at December

$3$

$1$

$,$

$2$

$0$

$2$

$1$

$,$

$$will be

$3$

$9$

$0$

$$rotomolded kayaks.

Production of each kayak requires

$6$

$0$

$$pounds of polyethylene powder and a finishing kit

$($

rope

$,$

$$seat$,$ hardware, etc.

$)$

$.$

$$Company policy is that the ending inventory of polyethylene powder should be

$2$

$0$

$\%$

$$of the amount needed for production in the next quarter. Assume that the ending inventory of polyethylene powder on December

$3$

$1$

$,$

$2$

$0$

$2$

$1$

$,$

$$is

$2$

$0$

$,$

$8$

$0$

$0$

$$pounds$.$ The finishing kits can be assembled as they are needed. As a result, Current Designs does not maintain a significant inventory of the finishing kits.

The polyethylene powder used in these kayaks costs $

$1$

$.$

$2$

$0$

$$per pound, and the finishing kits cost $

$1$

$6$

$0$

$$each$.$ Production of a single kayak requires

$2$

$$hours of time by more experienced, type I employees and

$3$

$$hours of finishing time by type Il employees. The type I employees are paid $

$1$

$9$

$$per hour, and the type Il employees are paid $

$1$

$6$

$$per hour.

Selling and administrative expenses for this line are expected to be $

$4$

$6$

$$per unit sold plus $

$8$

$,$

$9$

$0$

$0$

$$per quarter. Manufacturing overhead is assigned at

$1$

$5$

$0$

$\%$

$$of labor costs.