**Lugo Company Sales and Production Budgets for April, May, and June****Overview:**Lugo Company manufactures drinking glasses. Each unit is a package of eight glasses, selling for $24. Expected sales for April are projected at 2,500 packages, increasing by 200 packages in each subsequent month, May and June, continuing into July. As of April 1, Lugo has 400 packages in inventory and aims to maintain an ending inventory of 20% of the following month's sales. Below is a detailed breakdown of the sales and production budgets for each month.**Sales Budget:**| | April | May | June | Total ||------------------------|-------|-----|------|--------|| Budgeted packages to be sold | 2,500 | 2,700 | 2,900 | 8,100 || Sales price per package | $24 | $24 | $24 | $24 || Total sales | $60,000 | $64,800 | $69,600 | $194,400 |*This section of the budget outlines the number of packages expected to be sold and the total sales revenue for each month.***Production Budget:**| | April | May | June | Total ||------------------------|-------|-----|------|--------|| Budgeted packages to be sold | 2,500 | 2,700 | 2,900 | 8,100 || Plus: Desired packages in ending inventory | | | | || Total packages needed | | | | || Less: Packages in beginning inventory | | | | || Budgeted packages to be produced | | | | |*The production budget is intended to calculate the number of packages that need to be produced, considering the desired ending inventory and the packages already available at the start of each month.***Key Steps in Budget Preparation:**1. **Determine Sales Projections:** Estimate the number of packages to be sold each month.2. **Calculate Revenue:** Multiply the expected sales volume by the price per package.3. **Inventory Planning:** Ensure that the company maintains an ending inventory of 20% of the following month's sales.4. **Production Scheduling:** Compute the total production requirement by considering the sales forecast and inventory needs.The budget preparation assists Lugo Company in aligning

Production budget:- Production budget is the budget that is prepared by production companies for knowing how many units are to be produced for a day/week/month/quarter/half year/year so that there will be no loss. Production budget of Lugo company April May June Total Budgeted packages to be sold 2500 2700 2900 8100 (+) Desired packages in the ending 540 580 620 1740 inventory (20% of next month's BP to be sold) Total packages needed 3040 3280 3520 9840 (-) Packages in the beginning inventory 400 540 580 1520 Budgeted packages to be produced 2640 2740 2940 8320

Business

Accounting

Now prepare a production budget for April, May, and June. Lugo Company Production Budget April, May, and June April May June Total 2500 2700 2900 8100 Budgeted packages to be sold Plus: Desired packages in ending inventory Total packages needed Less: Packages in beginning inventory Budgeted packages to be produced

Now prepare a production budget for April, May, and June. Lugo Company Production Budget April, May, and June April May June Total 2500 2700 2900 8100 Budgeted packages to be sold Plus: Desired packages in ending inventory Total packages needed Less: Packages in beginning inventory Budgeted packages to be produced

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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