4. Revenues, production, and purchases budgets. The Suzuki Co. in Japan has a di

Question

    4. Revenues, production, and purchases budgets.

        The Suzuki Co. in Japan has a division that manufactures two-wheel motorcycles. Its budgeted sales for Model G in 2015 is 900,000 units. Suzuki’s target ending inventory is 80,000 units, and its beginning inventory is 100,000 units. The company’s budgeted selling price to its distributors and dealers is 400,000 yen per motorcycle.

        Suzuki buys all its wheels from an outside supplier. No defective wheels are accepted. (Suzuki’s needs for extra wheels for replacement parts are ordered by a separate division of the company.) The company’s target ending inventory is 60,000 wheels, and its beginning inventory is 50,000 wheels. The budgeted purchase price is 16,000 yen per wheel.

Required

A.) Compute the budgeted revenues in yen.

B.) Compute the number of motorcycles to be produced.

C.) Compute the budgeted purchases of wheels in units and in yen.

Explanation / Answer

a) Budgeted revenue = 900000*400000 = 360000000000 Yen

b) Number of motorcycle produced = 900000+80000-100000 = 880000 Units

c) Budgeted purchases of wheels = (880000*2)+60000-50000 = 1770000 Units

and (1770000*16000) = 28320000000 yen

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