Chapter 4, Problem 22P

Wright Lighting Fixtures forecasts its sales in units for the next four months as follows:

Wright maintains an ending inventory for each month in the amount of one and one-half times the expected sales in the following month. The ending inventory for February (March’s beginning inventory) reflects this policy. Materials cost $\text{\$7}$ per unit and are paid for in the month after production. Labor cost is $\text{\$3}$ per unit and is paid for in the month incurred. Fixed overhead is $\text{\$10,000}$ per month. Dividends of $\text{\$14,000}$ are to be paid in May. Eight thousand units were produced in February.

Complete a production schedule and a summary of cash payments for March, April, and May. Remember that production in any one month is equal to sales plus desired ending inventory minus beginning inventory.