A Sales Budget Is Given Below for One of the Products

question 102

Essay

A sales budget is given below for one of the products manufactured by the Key Co.:
The inventory of finished goods at the end of each month must equal 20% of the next month's sales.On December 31,the finished goods inventory totaled 4,000 units.
Each unit of product requires three specialized electrical switches.Since the production of these specialized switches by Key's suppliers is sometimes irregular,the company has a policy of maintaining an ending inventory at the end of each month equal to 30% of the next month's production needs.This requirement had been met on January 1 of the current year.
Required:
Prepare a budget showing the quantity of switches to be purchased each month for January,February,and March and in total for the quarter.

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Definitions:

Population

The entire group of individuals or items that share one or more characteristics, from which samples may be drawn for statistical analysis.

Sample Value

A single observation or measurement taken from a larger set of data, known as a sample.

Significant Difference

A statistical assessment that shows that the observed results in a study were unlikely to have occurred by chance.

Standard Error

The standard deviation of the sampling distribution of a statistic, typically used to measure the accuracy of sample mean estimates.