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Category > Management Posted 28 Sep 2017 My Price 10.00

Strum Enterprises

Question

Integrated sales budget, production budget, and purchases budget

(LO 3) Strum Enterprises is a boutique guitar manufacturer. The company produces both acoustic and electric guitars for rising and established professional musicians. Claire Strum, the company's sales manager, prepared the following sales forecast for 2015. The forecasted sales prices include a 5 percent increase in the acoustic guitar price and a 10 percent increase in the electric guitar price, to cover anticipated increases in raw materials prices.

Required

(a)

Prepare Strum's sales budget for 2015.
(b)

On December 31, 2014, Strum had 60 acoustic guitars in stock—fewer than the desired inventory level of 80 guitars, based on the following quarter's sales. The company has budgeted for sales of 450 acoustic guitars in the first quarter of 2016. Prepare the 2015 production budget for acoustic guitars.
(c)

Each acoustic guitar requires a maple neck blank, which Strum purchases for $60. On December 31, 2014, Strum had 400 neck blanks in inventory. Spoilage during the production process results in a standard quantity of 1.2 necks per acoustic guitar. Because of recent delivery problems, Strum wants to maintain an ending inventory equal to 50 percent of the following quarter's production needs. Since the supplier has assured Strum that the delivery issues will be resolved by the end of December, Strum wants only 300 neck blanks in inventory on December 31, 2015. Prepare the purchases budget for neck blanks for 2015.

 

a)            
             
Statement showing sales Budget for Acoustic Guitar        
Particulars 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total  
Sales Price 1,260.00 1,260.00 1,260.00 1,260.00 1,260.00  
Sales 400.00 500.00 300.00 600.00 1,800.00  
Total Sales Value 504,000.00 630,000.00 378,000.00 756,000.00 2,268,000.00  
             
Statement showing sales Budget for Electrc Guitar        
Particulars 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total  
Sales Price 2,530.00 2,530.00 2,530.00 2,530.00 2,530.00  
Sales 200.00 80.00 100.00 120.00 500.00  
Total Sales Value 506,000.00 202,400.00 253,000.00 303,600.00 1,265,000.00  
             
b)            
Existing acoustic Guitars at beginning of 2015 60.00          
Desired Guitars based on next Quarter forecasted sales 80.00          
Next Quarter sales 400.00          
Inventory % 20.00%          
             
Statement showing Production Budget for Acoustic Guitar        
Particulars 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total 5Th Quarter
Sales 400.00 500.00 300.00 600.00 1,800.00 450.00
Opening 60.00 100.00 60.00 120.00 60.00  
Closing at 20% 100.00 60.00 120.00 90.00 90.00  
Total Production(Sales + Closing - Opening) 440.00 460.00 360.00 570.00 1,830.00  
             
c)            
Statement showing Purchase Budget for Maple Neck        
Particulars 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total  
Production of Guitar 440.00 460.00 360.00 570.00 1,830.00  
Standard necks per acoustic guitar 1.20 1.20 1.20 1.20 1.20  
Total necks required for Production 528.00 552.00 432.00 684.00 2,196.00  
Opening 400.00 276.00 216.00 342.00 400.00  
Closing @50% of next quarter prod needs 276.00 216.00 342.00 300.00 300.00  
Total Purchases(Productionreqd + Closing - opening) 404.00 492.00 558.00 642.00 2,096.00  
Purchase price 60.00 60.00 60.00 60.00 60.00  
Total Purchase cost 24,240.00 29,520.00 33,480.00 38,520.00 125,760.00  

Answers

Maurice Tutor
(5)
Status NEW Posted 28 Sep 2017 11:09 PM My Price 10.00

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