18.) Marlow Company produces hand tools. A production budget for the next four m

Question

18.)

Marlow Company produces hand tools. A production budget for the next four months is as follows: March 10,600 units, April 13,625, May 16,600, and June 21,000. Marlow Company’s ending finished goods inventory policy is 15% of the following month’s sales. Marlow plans to sell 16,600 units in May. What is budgeted ending inventory for March?

1,590

2,044

1,965

2,490

19.)

Jared Inc. produces leather handbags. The sales budget for the next four months is: July 5,300 units, August 7,300, September 7,500, October 8,800. Each handbag requires 0.5 square meters of leather. Jared Inc.’s finished goods inventory policy is 10% of next month’s sales needs. Jared Inc.’s leather inventory policy is 30% of next month’s production needs. What will leather purchases be in August? (Do not round intermediate calculations. Round your final answer to the nearest whole number.)

3,707 square meters

3,532 square meters

3,557 square meters

3,615 square meters

Marlow Company produces hand tools. A production budget for the next four months is as follows: March 10,600 units, April 13,625, May 16,600, and June 21,000. Marlow Company’s ending finished goods inventory policy is 15% of the following month’s sales. Marlow plans to sell 16,600 units in May. What is budgeted ending inventory for March?

Explanation / Answer

18)

April sales + (16,600 × 15%) - (April sales × 15%) = 13,625.

So April sales × 85% = 11,135, (13,625-(16,600*15%)

which means April sales is 13,100. (11,135/85*100)

March ending inventory is 15% × 13,100 = 1,965, which is the beginning inventory for April

19)

Production in August is 7,300 + (7,500 × 10%) - (7,300 × 10%) = 7,320.

Production in September is 7,500 + (8,800 × 10%) - (7,500 × 10%) = 7,630.

Leather purchases in August are (7,320 × 0.50) + (7,630 × 0.50 × 30%) - (7,320 × 0.50 × 30%) = 3,707 square meters

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