A sales budget is given below for one of the products manufactured by the Key...
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Accounting
A sales budget is given below for one of the products manufactured by the Key Company:
January
units
February
units
March
units
April
units
May
units
June
units
The inventory of finished goods at the end of each month should equal of the next month's sales. However, on December the finished goods inventory totaled only 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 of the next month's production needs. This requirement had been met on January of the current year.
Required:
a Prepare a budget showing the required production each month for January, February, March, and April.
b Prepare a budget showing the quantity of switches to be purchased each month for January, February, and March.
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