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Refer to Exercises 7-3 and 7-4 in your textbook and answer the questions that follow. Your response should be 2 to 3 pages long, including attachments. Please add references for used source.
Exercise 7-3,Manufacturing:Production budget
P1
Hospitable Co. provides the following sales forecast for the next four months:
April May June July
Sales (units) . . . . . . . . 500 580 540 620
The company wants to end each month with ending finished goods inventory equal to 25% of next
month’s sales. Finished goods inventory on April 1 is 190 units. Assume July’s budgeted production is 540
units. Prepare a production budget for the months of April, May, and June.
Directmaterials budget
Refer to the information in Exercise 7-3. In addition, each finished unit requires five pounds of raw materials
and the company wants to end each month with raw materials inventory equal to 30% of next month’s
production needs. Beginning raw materials inventory for April was 663 pounds. Assume direct materials
cost $4 per pound. Prepare a direct materials budget for April, May, and June.
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