5. The Ahead of Our Time Inc. manufactures state of the art bamboo dining room tables. Budgeted sales for the first 5 months of the years are as follows: Month Budget Sales (units) January 200 February 240 March 180 April 160 240 300 May June Each table requires 10 square feet of bamboo at a cost of $20 per square foot. The company wants to maintain an inventory of tables equal to 25% of the following month's sales. At the beginning of the year, 40 tables were on hand. Assume the company maintains an inventory of bamboo equal to 10% of the next month's production needs. At the beginning of the year, 240 square feet of bamboo are on hand. Inventory of bamboo at April 30 is estimated to be 255 square feet. a. Prepare a production budget, in units, for each of the first four months. b. Prepare a direct material purchases budget, in dollars, for each of the first three months.

Principles of Accounting Volume 2
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Chapter7: Budgeting
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5. The Ahead of Our Time Inc. manufactures state of the art bamboo dining room tables. Budgeted
sales for the first 5 months of the years are as follows:
Month
Budget Sales (units)
January
200
February
240
March
180
April
160
240
300
May
June
Each table requires 10 square feet of bamboo at a cost of $20 per square foot.
The company wants to maintain an inventory of tables equal to 25% of the following month's sales.
At the beginning of the year, 40 tables were on hand.
Assume the company maintains an inventory of bamboo equal to 10% of the next month's production
needs. At the beginning of the year, 240 square feet of bamboo are on hand. Inventory of bamboo
at April 30 is estimated to be 255 square feet.
a. Prepare a production budget, in units, for each of the first four months.
b. Prepare a direct material purchases budget, in dollars, for each of the first three months.
Transcribed Image Text:5. The Ahead of Our Time Inc. manufactures state of the art bamboo dining room tables. Budgeted sales for the first 5 months of the years are as follows: Month Budget Sales (units) January 200 February 240 March 180 April 160 240 300 May June Each table requires 10 square feet of bamboo at a cost of $20 per square foot. The company wants to maintain an inventory of tables equal to 25% of the following month's sales. At the beginning of the year, 40 tables were on hand. Assume the company maintains an inventory of bamboo equal to 10% of the next month's production needs. At the beginning of the year, 240 square feet of bamboo are on hand. Inventory of bamboo at April 30 is estimated to be 255 square feet. a. Prepare a production budget, in units, for each of the first four months. b. Prepare a direct material purchases budget, in dollars, for each of the first three months.
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