Question

Crane Enterprises is a boutique guitar manufacturer. The company produces both acoustic and electric guitars for rising and established professional musicians. Betty Harris, the company’s sales manager, prepared the following sales forecast for 2022. The forecasted sales prices include a 5% increase in the acoustic guitar price and a 10% increase in the electric guitar price, to cover anticipated increases in raw materials prices.

		Sales Price			1st Quarter			2nd Quarter			3rd Quarter			4th Quarter
Acoustic guitar sales		$1,350			200			280			320			330
Electric guitar sales		$2,050			400			350			320			360

b) On December 31, 2021, Crane had 30 acoustic guitars in stock—fewer than the desired inventory level of 80 guitars, based on the following quarter’s sales. The company has budgeted for sales of 240 acoustic guitars in the first quarter of 2023. Prepare the 2022 production budget for acoustic guitars.

Answer 1

Answer-:

b). Production budget is prepared for calculating the number of units that must be manufactured during a period.

Working note-:

Budgeted ending inventory percentage= 80 guitars/200 guitars

= 40% of following quarter sales.

Thankyou...........