Lock Tight, Inc., produces outside doors for installation on homes. The following information was gathered to prepare budgets for the upcoming year beginning January 1. Sales forecast in units 6,500 doors Finished goods inventory, January 1 720 doors 680 doors Target finished goods inventory, December 31 Raw materials inventory-steel, January 1 40,000 pounds 80,000 pounds Target inventory-steel, December 31 Raw materials inventory-glass, January 1 6,000 square feet 4,000 square feet Target inventory-glass, December 31 $4 per pound Budgeted purchase price-steel Budgeted purchase price-glass. $2 per square foot The manufacture of each door requires 20 pounds of steel and 6 square feet of glass. Prepare the production schedule in units for Lock Tight. b. Using the production schedule, develop the direct materials purchase budgets for steel and glass. c. Why might Lock Tight's target level of steel inventory be higher than last year's ending bal- ance and its target level of glass inventory be lower than last year's ending balance? a.
Lock Tight, Inc., produces outside doors for installation on homes. The following information was gathered to prepare budgets for the upcoming year beginning January 1. Sales forecast in units 6,500 doors Finished goods inventory, January 1 720 doors 680 doors Target finished goods inventory, December 31 Raw materials inventory-steel, January 1 40,000 pounds 80,000 pounds Target inventory-steel, December 31 Raw materials inventory-glass, January 1 6,000 square feet 4,000 square feet Target inventory-glass, December 31 $4 per pound Budgeted purchase price-steel Budgeted purchase price-glass. $2 per square foot The manufacture of each door requires 20 pounds of steel and 6 square feet of glass. Prepare the production schedule in units for Lock Tight. b. Using the production schedule, develop the direct materials purchase budgets for steel and glass. c. Why might Lock Tight's target level of steel inventory be higher than last year's ending bal- ance and its target level of glass inventory be lower than last year's ending balance? a.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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
Transcribed Image Text:Lock Tight, Inc., produces outside doors for installation on homes. The following information was
gathered to prepare budgets for the upcoming year beginning January 1.
irect
Sales forecast in units
6,500 doors
Finished goods inventory, January 1
720 doors
680 doors
Target finished goods inventory, December 31
Raw materials inventory-steel, January 1
40,000 pounds
80,000 pounds
Target inventory-steel, December 31 .
Raw materials inventory-glass, January 1
6,000 square feet
4,000 square feet
Target inventory-glass, December 31
$4 per pound
Budgeted purchase price-steel .
Budgeted purchase price-glass ....
$2 per square foot
The manufacture of each door requires 20 pounds of steel and 6 square feet of glass.
Prepare the production schedule in units for Lock Tight.
b. Using the production schedule, develop the direct materials purchase budgets for steel and glass.
a.
Why might Lock Tight's target level of steel inventory be higher than last year's ending bal-
ance and its target level of glass inventory be lower than last year's ending balance?
с.
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