Production and Purchases Budgets

question 92

Essay

Production and purchases budgets
Brian Furniture,Inc.manufactures a variety of desks,chairs,tables,and shelf units that are sold to public school systems throughout the Midwest.The controller of the company's School Desk Division is currently preparing a budget for the second quarter of 2018.The following sales forecast has been developed by the division's sales manager:
The inventory of finished desk and chair sets at the end of each month must be equal to 30% of the budgeted sales for the next month.On April 1,there will be 1,950 units of desk and chair sets on hand.
Work-in-process inventories are negligible and can be safely ignored.
Each desk and chair set requires 10 board feet of pine planks.Pine planks cost $0.75 per board foot,and the division ends each month with enough pine to cover 20% of the next month's production requirements.This requirement will be met on April 1 of 2018.
Required.Prepare a production budget and a materials purchases budget for April,May,and June and in total for the three-month period.

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Definitions:

Output Levels

The quantity of goods or services produced by a company or an economic system within a specific period.

Fixed Cost

Costs that do not vary with the level of output or sales, such as rent, salaries, and insurance premiums.

Total Cost

The complete cost of production, including both fixed and variable costs.

Computer Software

Computer software refers to a set of instructions or programs that tell a computer how to perform specific tasks.