Berring Company produces two products: the deluxe and the standard. The deluxe sells for $40, and the standard sells for $10. Projected sales of the two models for the coming four quarters are given below. Deluxe Standard First quarter 12,000 90,000 Second quarter 14,200 88,600 Third quarter 16,800 92,000 Fourth quarter 20,000 91,800 The president of the company believes that the projected sales are realistic and can be achieved by the company. In the factory, the production supervisor has received the projected sales figures and gathered information needed to compile production budgets. He found that 1,300 deluxes and 1,170 standards were in inventory on January 1. Company policy dictates that ending inventory should equal 20 percent of the next quarter’s sales for deluxes and 10 percent of next quarter’s sales for standards. Required: Question Content Area 1. Prepare a sales budget for each quarter and for the year in total. Show sales by product and in total for each time period. Berring CompanySales BudgetFor the Year Ended December 31 Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year Deluxe: Units fill in the blank 67173bff4fcf007_1 fill in the blank 67173bff4fcf007_2 fill in the blank 67173bff4fcf007_3 fill in the blank 67173bff4fcf007_4 fill in the blank 67173bff4fcf007_5 Unit price $fill in the blank 67173bff4fcf007_6 $fill in the blank 67173bff4fcf007_7 $fill in the blank 67173bff4fcf007_8 $fill in the blank 67173bff4fcf007_9 $fill in the blank 67173bff4fcf007_10 Sales $fill in the blank 67173bff4fcf007_11 $fill in the blank 67173bff4fcf007_12 $fill in the blank 67173bff4fcf007_13 $fill in the blank 67173bff4fcf007_14 $fill in the blank 67173bff4fcf007_15 Standard: Units fill in the blank 67173bff4fcf007_16 fill in the blank 67173bff4fcf007_17 fill in the blank 67173bff4fcf007_18 fill in the blank 67173bff4fcf007_19 fill in the blank 67173bff4fcf007_20 Unit price $fill in the blank 67173bff4fcf007_21 $fill in the blank 67173bff4fcf007_22 $fill in the blank 67173bff4fcf007_23 $fill in the blank 67173bff4fcf007_24 $fill in the blank 67173bff4fcf007_25 Sales $fill in the blank 67173bff4fcf007_26 $fill in the blank 67173bff4fcf007_27 $fill in the blank 67173bff4fcf007_28 $fill in the blank 67173bff4fcf007_29 $fill in the blank 67173bff4fcf007_30 Total Sales $fill in the blank 67173bff4fcf007_31 $fill in the blank 67173bff4fcf007_32 $fill in the blank 67173bff4fcf007_33 $fill in the blank 67173bff4fcf007_34 $fill in the blank 67173bff4fcf007_35 Question Content Area 2. Prepare a separate production budget for each product for each of the first three quarters of the year. Production budget for deluxes: Berring CompanyProduction Budget for DeluxesFirst Three Quarters of the Year Quarter 1 Quarter 2 Quarter 3 Unit sales fill in the blank 3608c2f64fd5fb8_1 fill in the blank 3608c2f64fd5fb8_2 fill in the blank 3608c2f64fd5fb8_3 - Select - - Select - - Select - Total needed fill in the blank 3608c2f64fd5fb8_8 fill in the blank 3608c2f64fd5fb8_9 fill in the blank 3608c2f64fd5fb8_10 - Select - - Select - - Select - Units produced fill in the blank 3608c2f64fd5fb8_15 fill in the blank 3608c2f64fd5fb8_16 fill in the blank 3608c2f64fd5fb8_17 Question Content Area Production budget for standards: Berring CompanyProduction Budget for StandardsFirst Three Quarters of the Year Quarter 1 Quarter 2 Quarter 3 Unit sales fill in the blank 9347eeffe04af98_1 fill in the blank 9347eeffe04af98_2 fill in the blank 9347eeffe04af98_3 - Select - - Select - - Select - Total needed fill in the blank 9347eeffe04af98_8 fill in the blank 9347eeffe04af98_9 fill in the blank 9347eeffe04af98_10 - Select - - Select - - Select - Units produced fill in the blank 9347eeffe04af98_15 fill in the blank 9347eeffe04af98_16 fill in the blank 9347eeffe04af98_17

Berring Company produces two products: the deluxe and the standard. The deluxe sells for $40, and the standard sells for $10. Projected sales of the two models for the coming four quarters are given below. Deluxe Standard First quarter 12,000 90,000 Second quarter 14,200 88,600 Third quarter 16,800 92,000 Fourth quarter 20,000 91,800 The president of the company believes that the projected sales are realistic and can be achieved by the company. In the factory, the production supervisor has received the projected sales figures and gathered information needed to compile production budgets. He found that 1,300 deluxes and 1,170 standards were in inventory on January 1. Company policy dictates that ending inventory should equal 20 percent of the next quarter’s sales for deluxes and 10 percent of next quarter’s sales for standards. Required: Question Content Area 1. Prepare a sales budget for each quarter and for the year in total. Show sales by product and in total for each time period. Berring CompanySales BudgetFor the Year Ended December 31 Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year Deluxe: Units fill in the blank 67173bff4fcf007_1 fill in the blank 67173bff4fcf007_2 fill in the blank 67173bff4fcf007_3 fill in the blank 67173bff4fcf007_4 fill in the blank 67173bff4fcf007_5 Unit price $fill in the blank 67173bff4fcf007_6 $fill in the blank 67173bff4fcf007_7 $fill in the blank 67173bff4fcf007_8 $fill in the blank 67173bff4fcf007_9 $fill in the blank 67173bff4fcf007_10 Sales $fill in the blank 67173bff4fcf007_11 $fill in the blank 67173bff4fcf007_12 $fill in the blank 67173bff4fcf007_13 $fill in the blank 67173bff4fcf007_14 $fill in the blank 67173bff4fcf007_15 Standard: Units fill in the blank 67173bff4fcf007_16 fill in the blank 67173bff4fcf007_17 fill in the blank 67173bff4fcf007_18 fill in the blank 67173bff4fcf007_19 fill in the blank 67173bff4fcf007_20 Unit price $fill in the blank 67173bff4fcf007_21 $fill in the blank 67173bff4fcf007_22 $fill in the blank 67173bff4fcf007_23 $fill in the blank 67173bff4fcf007_24 $fill in the blank 67173bff4fcf007_25 Sales $fill in the blank 67173bff4fcf007_26 $fill in the blank 67173bff4fcf007_27 $fill in the blank 67173bff4fcf007_28 $fill in the blank 67173bff4fcf007_29 $fill in the blank 67173bff4fcf007_30 Total Sales $fill in the blank 67173bff4fcf007_31 $fill in the blank 67173bff4fcf007_32 $fill in the blank 67173bff4fcf007_33 $fill in the blank 67173bff4fcf007_34 $fill in the blank 67173bff4fcf007_35 Question Content Area 2. Prepare a separate production budget for each product for each of the first three quarters of the year. Production budget for deluxes: Berring CompanyProduction Budget for DeluxesFirst Three Quarters of the Year Quarter 1 Quarter 2 Quarter 3 Unit sales fill in the blank 3608c2f64fd5fb8_1 fill in the blank 3608c2f64fd5fb8_2 fill in the blank 3608c2f64fd5fb8_3 - Select - - Select - - Select - Total needed fill in the blank 3608c2f64fd5fb8_8 fill in the blank 3608c2f64fd5fb8_9 fill in the blank 3608c2f64fd5fb8_10 - Select - - Select - - Select - Units produced fill in the blank 3608c2f64fd5fb8_15 fill in the blank 3608c2f64fd5fb8_16 fill in the blank 3608c2f64fd5fb8_17 Question Content Area Production budget for standards: Berring CompanyProduction Budget for StandardsFirst Three Quarters of the Year Quarter 1 Quarter 2 Quarter 3 Unit sales fill in the blank 9347eeffe04af98_1 fill in the blank 9347eeffe04af98_2 fill in the blank 9347eeffe04af98_3 - Select - - Select - - Select - Total needed fill in the blank 9347eeffe04af98_8 fill in the blank 9347eeffe04af98_9 fill in the blank 9347eeffe04af98_10 - Select - - Select - - Select - Units produced fill in the blank 9347eeffe04af98_15 fill in the blank 9347eeffe04af98_16 fill in the blank 9347eeffe04af98_17

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

5 Question Content Area

Sales and Production Budgets

	Deluxe	Standard
First quarter	12,000	90,000
Second quarter	14,200	88,600
Third quarter	16,800	92,000
Fourth quarter	20,000	91,800

The president of the company believes that the projected sales are realistic and can be achieved by the company. In the factory, the production supervisor has received the projected sales figures and gathered information needed to compile production budgets. He found that 1,300 deluxes and 1,170 standards were in inventory on January 1. Company policy dictates that ending inventory should equal 20 percent of the next quarter’s sales for deluxes and 10 percent of next quarter’s sales for standards.

Required:

Question Content Area

1. Prepare a sales budget for each quarter and for the year in total. Show sales by product and in total for each time period.

Berring CompanySales BudgetFor the Year Ended December 31

	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Year
Deluxe:
Units	fill in the blank 67173bff4fcf007_1	fill in the blank 67173bff4fcf007_2	fill in the blank 67173bff4fcf007_3	fill in the blank 67173bff4fcf007_4	fill in the blank 67173bff4fcf007_5
Unit price	$fill in the blank 67173bff4fcf007_6	$fill in the blank 67173bff4fcf007_7	$fill in the blank 67173bff4fcf007_8	$fill in the blank 67173bff4fcf007_9	$fill in the blank 67173bff4fcf007_10
Sales	$fill in the blank 67173bff4fcf007_11	$fill in the blank 67173bff4fcf007_12	$fill in the blank 67173bff4fcf007_13	$fill in the blank 67173bff4fcf007_14	$fill in the blank 67173bff4fcf007_15
Standard:
Units	fill in the blank 67173bff4fcf007_16	fill in the blank 67173bff4fcf007_17	fill in the blank 67173bff4fcf007_18	fill in the blank 67173bff4fcf007_19	fill in the blank 67173bff4fcf007_20
Unit price	$fill in the blank 67173bff4fcf007_21	$fill in the blank 67173bff4fcf007_22	$fill in the blank 67173bff4fcf007_23	$fill in the blank 67173bff4fcf007_24	$fill in the blank 67173bff4fcf007_25
Sales	$fill in the blank 67173bff4fcf007_26	$fill in the blank 67173bff4fcf007_27	$fill in the blank 67173bff4fcf007_28	$fill in the blank 67173bff4fcf007_29	$fill in the blank 67173bff4fcf007_30
Total Sales	$fill in the blank 67173bff4fcf007_31	$fill in the blank 67173bff4fcf007_32	$fill in the blank 67173bff4fcf007_33	$fill in the blank 67173bff4fcf007_34	$fill in the blank 67173bff4fcf007_35

Question Content Area

2. Prepare a separate production budget for each product for each of the first three quarters of the year.

Production budget for deluxes:

Berring CompanyProduction Budget for DeluxesFirst Three Quarters of the Year

	Quarter 1	Quarter 2	Quarter 3
Unit sales	fill in the blank 3608c2f64fd5fb8_1	fill in the blank 3608c2f64fd5fb8_2	fill in the blank 3608c2f64fd5fb8_3
	- Select -	- Select -	- Select -
Total needed	fill in the blank 3608c2f64fd5fb8_8	fill in the blank 3608c2f64fd5fb8_9	fill in the blank 3608c2f64fd5fb8_10
	- Select -	- Select -	- Select -
Units produced	fill in the blank 3608c2f64fd5fb8_15	fill in the blank 3608c2f64fd5fb8_16	fill in the blank 3608c2f64fd5fb8_17

Question Content Area

Production budget for standards:

Berring CompanyProduction Budget for StandardsFirst Three Quarters of the Year

	Quarter 1	Quarter 2	Quarter 3
Unit sales	fill in the blank 9347eeffe04af98_1	fill in the blank 9347eeffe04af98_2	fill in the blank 9347eeffe04af98_3
	- Select -	- Select -	- Select -
Total needed	fill in the blank 9347eeffe04af98_8	fill in the blank 9347eeffe04af98_9	fill in the blank 9347eeffe04af98_10
	- Select -	- Select -	- Select -
Units produced	fill in the blank 9347eeffe04af98_15	fill in the blank 9347eeffe04af98_16	fill in the blank 9347eeffe04af98_17

Sales Forecast and Budget
Audio-2-Go, Inc., manufactures MP3 players. Models A-1, A-2, and A-3 are small and light. They are attached to armbands and use flash memory. Models A-4 and A-5 are somewhat larger and use a built-in hard drive; they can be put into fanny
packs for use while working out. It is now early January, and Audio-2-Go's budgeting team is finalizing the sales budget for this year. Sales in units and dollars for last year were as follows:
Model
Number Sold
Price
Revenue
A-1
25,000
$ 60
$1,500,000
A-2
39,000
2,925,000
75
110
A-3
5,720,000
52,000
14,000
A-4
150
2,100,000
A-5
3,000
250
750,000
$12,995,000
In looking over the last year's sales figures, Audio-2-Go's sales budgeting team recalled the following:
a. Model A-1 costs were rising faster than the price could rise. Preparatory to phasing out this model, Audio-2-Go, Inc., planned to slash advertising for this model and raise its price by 20 percent. The number of units of Model A-1 to be sold was
forecast to be 50 percent of last year's units.
b. Model A-5 was introduced on November 1 of last year. It contains a built-in 20 GB hard drive and can be synchronized with several popular music software programs. Audio-2-Go brought out this model to match competitors' audio players, but
the price is so much higher than other Audio-2-Go products, that sales have been disappointing. The company plans to discontinue this model on June 30 of this year, and thinks that monthly sales will remain at last year's level if the sales price
remains unchanged.
c. Audio-2-Go plans to introduce Model A-6 on July 1 of this year. It will be a high-end player that will be lighter and more versatile than Model A-5 (which it will replace). The target price for this model is $175; unit sales are estimated to equal
4,000 per month.
d. A competitor has announced plans to introduce an improved version of Model A-3. Audio-2-Go believes that the Model A-3 price must be cut 10 percent to maintain unit sales at last year's level.
e. It was assumed that unit sales of all other models would increase by 10 percent, prices remaining constant.
Required:
Prepare a sales forecast by product and in total for Audio-2-Go, Inc., for this year.
Audio-2-Go, Inc.
Sales Budget
For This Year
Model
Price
Total Sales
A-1
A-2
A-3
A-4
A-5
A-6
Total
Units
$

Purchases Budget
Tiger Drug Store carries a variety of health and beauty aids, including 500-count bottles of vitamins. The sales budget for vitamins for
the first six months of the year is presented below.
Unit Sales
Dollar Sales
January
200
$1,800
February
190
1,710
March
210
1,890
April
220
1,980
May
240
2,160
June
230
2,070
The owner of Tiger Drug believes that ending inventories should be sufficient to cover 10 percent of the next month's projected sales.
On January 1, 24 bottles of vitamins were in inventory.
Required:
1. Prepare a merchandise purchases budget in bottles of vitamins for as many months as you can.
Tiger Drug Store
Merchandise Purchases Budget
January February March April May
Unit sales
Desired EI
Total needed
Less: BI
Unit purchases
2. If vitamins are priced at cost plus 80 percent, what is the dollar cost of purchases for each month of your purchases budget?
January
February
March
April
May
00000

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