Cherboneau Novelties produces drink coasters (among many other products). During the current year (year 0), the company sold 523,000 units (packages of 6 coasters). In the coming year (year 1), the company expects to sell 546,000 units, and, in year 2, it expects to sell 660,000 units. The target ending finished goods inventory for each month is equal to the next month's sales. However, because of production issues, the ending inventory in the current year is expected to be only 13,500 units. Each unit requires 0.5 pound of cork. At the end of the current year, management expects to have 19,500 pounds of cork in inventory. Management has set a target to have cork on hand equal to one half of next month's sales requirements. Sales and production take place evenly throughout the year. Required: a. Compute the total targeted production of the finished coaster for the coming year. b. Compute the required amount of cork to be purchased for the coming year. Answer is not complete. a. Total targeted production in units b. Materials to be purchased in pounds 587,500 units pounds
Cherboneau Novelties produces drink coasters (among many other products). During the current year (year 0), the company sold 523,000 units (packages of 6 coasters). In the coming year (year 1), the company expects to sell 546,000 units, and, in year 2, it expects to sell 660,000 units. The target ending finished goods inventory for each month is equal to the next month's sales. However, because of production issues, the ending inventory in the current year is expected to be only 13,500 units. Each unit requires 0.5 pound of cork. At the end of the current year, management expects to have 19,500 pounds of cork in inventory. Management has set a target to have cork on hand equal to one half of next month's sales requirements. Sales and production take place evenly throughout the year. Required: a. Compute the total targeted production of the finished coaster for the coming year. b. Compute the required amount of cork to be purchased for the coming year. Answer is not complete. a. Total targeted production in units b. Materials to be purchased in pounds 587,500 units pounds
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Cherboneau Novelties produces drink coasters (among many other products). During the current year
(year 0), the company sold 523,000 units (packages of 6 coasters). In the coming year (year 1), the
company expects to sell 546,000 units, and, in year 2, it expects to sell 660,000 units. The target
ending finished goods inventory for each month is equal to the next month's sales. However, because
of production issues, the ending inventory in the current year is expected to be only 13,500 units.
Each unit requires 0.5 pound of cork. At the end of the current year, management expects to have
19,500 pounds of cork in inventory. Management has set a target to have cork on hand equal to one
half of next month's sales requirements. Sales and production take place evenly throughout the year.
Required:
a. Compute the total targeted production of the finished coaster for the coming year.
b. Compute the required amount of cork to be purchased for the coming year.
X Answer is not complete.
a. Total targeted production in units
b. Materials to be purchased in pounds
587,500
units
pounds
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Step 1: Introduce to production budget and material purchase budget
VIEWStep 2: Working for ending finished goods inventory and ending raw inventory of cork for coming year
VIEWStep 3: Working for total target production for coming year
VIEWStep 4: Working for material to be purchased for coming year
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