A sales budget is given below for one of the products manufactured by the Key Company. 27,000 units 42,000 units 67,000 units 47,000 units 37,000 units 31,000 units January February March April May June The inventory of finished goods at the end of each month should equal 20% of the next month's sales. However, on December 31 the inished goods inventory totaled only 5,400 units. Each unit of product requires three specialized electrical switches. Since the production of these specialized switches by Key's suppliers is sometimes irregular, the company has a policy of maintaining an ending ventory at the end of each month equal to 30% of the next month's production needs. This requirement had been met on January 1 of the current year.
A sales budget is given below for one of the products manufactured by the Key Company. 27,000 units 42,000 units 67,000 units 47,000 units 37,000 units 31,000 units January February March April May June The inventory of finished goods at the end of each month should equal 20% of the next month's sales. However, on December 31 the inished goods inventory totaled only 5,400 units. Each unit of product requires three specialized electrical switches. Since the production of these specialized switches by Key's suppliers is sometimes irregular, the company has a policy of maintaining an ending ventory at the end of each month equal to 30% of the next month's production needs. This requirement had been met on January 1 of the current year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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.
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Transcribed Image Text:A sales budget is given below for one of the products manufactured by the Key Company:
January
February
March
27,000 units
42,000 units
67,000 units
47,000 units
37,000 units
31,000 units
April
May
June
The inventory of finished goods at the end of each month should equal 20% of the next month's sales. However, on December 31 the
finished goods inventory totaled only 5,400 units. Each unit of product requires three specialized electrical switches. Since the
production of these specialized switches by Key's suppliers is sometimes irregular, the company has a policy of maintaining an ending
inventory at the end of each month equal to 30% of the next month's production needs. This requirement had been met on January 1
of the current year.
Required:
a. Prepare a budget showing the required production each month for January, February, March, and April.
b. Prepare a budget showing the quantity of switches to be purchased each month for January, February, and March.
Complete this question by entering your answers in the tabs below.
Required A
Prepare a budget showing the required production each month for January, Februrch, and April.
Note: Do not round your intermediate calculations. Round your final answers to th
urest whole number.
January
February
Required B
Budgeted sales (units)
Total needs
Required production in units
0
0
Required A
0
March
0
0
Required B >
0
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