Question

Corbett Company manufactures drinking glasses. One unit is a package of eight​ glasses, which sells for $18. Corbett projects sales for April will be 3,500 ​packages, with sales increasing by 100 packages per month for May​, June​, and July. On April ​1, Corbett has 250 packages on hand but desires to maintain an ending inventory of 10​% of the next​ month's sales. Prepare a sales budget and a production budget for Corbett for April​, May​, and June.

Corbett Company
Sales Budget
April, May, and June
	April	May	June	Total
Budgeted packages to be sold
Sales price per package
Total sales

Answer 1

Sales budget:

Corbett Company
Sales Budget
April, May, and June
	April	May	June	Total
Budgeted packages to be sold	3500	3600	3700	10800
Sales price per package	$18	$18	$18
Total sales	$63000	$64800	$66600	$194400

Production budget:

Corbett Company
Production Budget
April, May, and June
	April	May	June	Total
Budgeted packages to be sold	3500	3600	3700	10800
(+) Closing Inventory	360	370	380
(-) Opening Inventory	(250)	(360)	(370)
Budgeted Packages to be produced	3610	3610	3710	10930

Note 1:

Calculation of Closing Inventory:

Month	Calculations	Closing Inventory
April	3600*10%	360
May	3700*10%	370
June	3800*10%	380

Note 2:

Sales of July is 100 packages more than previous month i.e. 3800 (3700+100).

Note 3:

Previous month closing inventory becomes opening inventory of next month.