MEL Company manufactures and sells cricket bats for school teams. MEL's best-selling lines are the practice bats line and the match bats line. In the first four months of next year, MEL company expects to sell the following:
Practice Bats |
Match Bats |
|||
Units |
Selling Price |
Units |
Selling Price |
|
January |
40,000 |
$11.00 |
10,000 |
$21.00 |
February |
88,000 |
$11.00 |
12,000 |
$21.00 |
March |
92,000 |
$11.00 |
15,000 |
$21.00 |
April |
100,000 |
$11.00 |
20,000 |
$21.00 |
MEL Company requires ending inventory of product equal to 20 percent of the next month's unit sales. Beginning inventory in January was 4,000 practice bats and 600 match bats.
Required:
Construct a production budget for match bats line for MEL Company for the first three months of the coming year and answer the following question.
I. Units that must be produced in the month of January:
II. Estimated ending inventory of February
III. Units that must be produced in the month of March
answer :
MEL Company | |||
production budget( match bats) | |||
January | February | March | |
Budgeted unit sales | 10000 | 12000 | 15000 |
Add : Desired ending inventory | 2400 | 3000 | 4000 |
Total need | 12400 | 15000 | 19000 |
Less - Beginning inventory | 600 | 2400 | 3000 |
Units to be produced | 11800 | 12600 | 16000 |
I. Units that must be produced in the month of January:
= 11800
II. Estimated ending inventory of February
= 3000
III. Units that must be produced in the month of March
= 16000
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