Chow Corporation manufactures children's chairs made of PVS plastic tubing and heavy canvas material. Each chair requires eight feet of the PVC tubing and three yards of material. Budgeted sales are 20,000 chairs for June, 25,000 chairs for July and 30,000 chairs for August. Ending finished goods inventory is budgeted at 10% of the current month's sales. Ending materials inventories are budgeted at 10% of the current month's production. Required: a. Prepare a production budget for each of the months of June and July. Assume the beginning inventory of chairs in June will be 2,500 units. b. Prepare schedules showing purchase requirements for PVC tubing and for material for each of the months of June and July. Assume 16,000 feet of PVC tubing and 6,000 yards of material are on hand at the beginning of June.
Chow Corporation manufactures children's chairs made of PVS plastic tubing and heavy canvas material. Each chair requires eight feet of the PVC tubing and three yards of material. Budgeted sales are 20,000 chairs for June, 25,000 chairs for July and 30,000 chairs for August. Ending finished goods inventory is budgeted at 10% of the current month's sales. Ending materials inventories are budgeted at 10% of the current month's production. Required: a. Prepare a production budget for each of the months of June and July. Assume the beginning inventory of chairs in June will be 2,500 units. b. Prepare schedules showing purchase requirements for PVC tubing and for material for each of the months of June and July. Assume 16,000 feet of PVC tubing and 6,000 yards of material are on hand at the beginning of June.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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:Chow Corporation manufactures
children's chairs made of PVS plastic
tubing and heavy canvas material.
Each chair requires eight feet of the
PVC tubing and three yards of material.
Budgeted sales are 20,000 chairs for
June, 25,000 chairs for July and
30,000 chairs for August. Ending
finished goods inventory is budgeted
at 10% of the current month's sales.
Ending materials inventories are
budgeted at 10% of the current
month's production.
Required:
a. Prepare a production budget for
each of the months of June and July.
Assume the beginning inventory of
chairs in June will be 2,500 units.
b. Prepare schedules showing
purchase requirements for PVC tubing
and for material for each of the
months of June and July. Assume
16,000 feet of PVC tubing and 6,000
yards of material are on hand at the
beginning of June.
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