The following sales forecast was developed by the sales team at CV’s Manufacturing Company Limited for the months indicated. The company produces two products Hazel Nut and Hershey Nut Sales Forecast 2018 Details Hazel Nut Hershey Nut July 1.500 units 2,000 units August 1,750 units 2,250 units September 2,000 units 1,900 units October 1,400 units 1,600 units November 1,700 units 1,500 units December 2,200 units 2,300 units Notes: (i) To make one unit of Hazel Nut four (4) units of raw material F250 is used. One unit of F250 costs $40. Hershey Nut uses two (2) units of raw material K200 which costs $30 each. (ii) The company has decided that raw material stocks at the end of each month should be held equivalent to fifteen percent (15%) of the budgeted sales for the month in question. (iii) During the year, the company sold one unit of Hazel Nut for $110, while one unit of Hershey Nut was sold for $150. (iv) The decision was made that at the end of each month there should be in store sufficient finished goods stock to meet thirty percent (30%) of the sales for the next month. Required: (b) Prepare the production budget for both products for the period August to November 2018. 2018.
The following sales
Sales Forecast 2018
|
Details |
Hazel Nut |
Hershey Nut |
|
July |
1.500 units |
2,000 units |
|
August |
1,750 units |
2,250 units |
|
September |
2,000 units |
1,900 units |
|
October |
1,400 units |
1,600 units |
|
November |
1,700 units |
1,500 units |
|
December |
2,200 units |
2,300 units |
Notes:
(i) To make one unit of Hazel Nut four (4) units of raw material F250 is used. One unit of F250 costs $40. Hershey Nut uses two (2) units of raw material K200 which costs $30 each.
(ii) The company has decided that raw material stocks at the end of each month should be held equivalent to fifteen percent (15%) of the budgeted sales for the month in question.
(iii) During the year, the company sold one unit of Hazel Nut for $110, while one unit of Hershey Nut was sold for $150.
(iv) The decision was made that at the end of each month there should be in store sufficient finished goods stock to meet thirty percent (30%) of the sales for the next month.
Required:
(b) Prepare the production budget for both products for the period August to November 2018. 2018. (12 marks)
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