Keep-it-Hot Inc. manufactures popular thermoses. On June 30, the company had 1,0
ID: 2348904 • Letter: K
Question
Keep-it-Hot Inc. manufactures popular thermoses. On June 30, the company had 1,000 thermoses in inventory. Each thermos sells for $8.00. The company's policy is to maintain a thermos inventory equal to 10% of next month's sales. The company expects the following sales activity for the third quarter of the year:July
7,000 units
August
15,000 units
September
10,000 units
In addition, October's sales are expected to be 9,000 units.
A. Prepare a sales budget for the third quarter of the year.
B. Prepare a production budget for the third quarter of the year.
Explanation / Answer
Keep it Hot Inc. Sales Budget July August September Total Expected sales units 7000 15000 10000 32000 Unit sale price $8 $8 $8 $8 Total Sales $56,000 $120,000 $80,000 $256,000 ---------------------------------------------------------------------------------------------------- Keep it Hot Inc. Production Budget July August September Total Expected sales units 7000 15000 10000 32000 Add: Desired ending finished goods units 1,500 1,000 900 900 Total required units 8,500 16,000 10,900 32,900 Less: Beginning finished goods units 700 1500 1000 700 Required production units 7,800 14,500 9,900 32,200
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