Snip and Chip Inc. sells silk upholstery curtains for $150 each. The project’s b

Question

Snip and Chip Inc. sells silk upholstery curtains for $150 each. The project’s budgeted unit sales for four months during the current year appear below: February $39,000 April $42,000 May $44,000 June $40,000 Additional information: The project desires to have an inventory at the end of each month equal to 15 percent of the following month’s budgeted unit sales. Each curtain requires 2.0 yards of fabric. At the end of each month, the project decides to have 20 percent of the production material required for the next month on hand. The fabric costs $25 per yard. Each curtain produced requires 1 hour of direct labor. The project pays $27 per hour to its employees. Prepare the following budgets for the project: Production budget for the month of April Materials purchase budget for April Submission Requirements: Answer each problem in detail with conclusions and results. Submit the calculations in a Microsoft Excel file, showing step-by-step calculations. Submit the responses in a Microsoft Word document meeting the following criteria: o Font: Arial, Size: 12 point o Length: 2–3 pages

Explanation / Answer

Answer:

Production Budget April May Budgeted Sales 42000 44000 No of units of sale 280 293 Add: Ending Inventory 44 ($44,000/150)*15% 40 ($40,000/150)*15% Less: Opening units 42 ($42,000/150)*15% 44 No of units production 282 289

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