a production budget (LO 3) High Flyers manufactures competition stunt kites. In November, Jerry Box prepared the following production budget for the first quarter of the coming year. Desired ending inventory is based on the following month's budgeted sales. January February March Quarter Budgeted sales 20,000 35,000 30,000 85,000 Desired ending inventory 7,000 6,000 2,400 2,400 Kites needed 27,000 41,000 32,400 87,400 Less beginning inventory 4,000 7,000 6,000 4,000 Budgeted production 23,000 34,000 26,400 83,400 Following higher-than-expected sales in December, Jerry conducted an inventory count on January 2 and discovered that the company had only 2,000 completed kites on hand. He decided that given the brisk sales in December, the company should increase its desired ending inventory level from 20 to 25% of the next month's sales volume. What would be the production budget for the first quarter? How do I make a budget? b.What other components of the master budget will be affected by this change?
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
a production budget (LO 3) High Flyers manufactures competition stunt kites. In November, Jerry Box prepared the following production budget for the first quarter of the coming year. Desired ending inventory is based on the following month's budgeted sales.
|
January
|
February
|
March
|
Quarter
|
|
| Budgeted sales |
20,000
|
35,000
|
30,000
|
85,000
|
| Desired ending inventory |
7,000
|
6,000
|
2,400
|
2,400
|
| Kites needed |
27,000
|
41,000
|
32,400
|
87,400
|
| Less beginning inventory |
4,000
|
7,000
|
6,000
|
4,000
|
| Budgeted production |
23,000
|
34,000
|
26,400
|
83,400
|
Following higher-than-expected sales in December, Jerry conducted an inventory count on January 2 and discovered that the company had only 2,000 completed kites on hand. He decided that given the brisk sales in December, the company should increase its desired ending inventory level from 20 to 25% of the next month's sales volume.
What would be the production budget for the first quarter? How do I make a budget?
b.What other components of the
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