Question 3 5 Marks Varney Company makes rolling suitcases. Its sales budget for
ID: 2513814 • Letter: Q
Question
Question 3 5 Marks
Varney Company makes rolling suitcases. Its sales budget for four months is: Month
Sales
R
March
15,000
April
20,000
May
40,000
June
60,000
Varney's policy is that ending inventory of finished suitcases should equal 30% of the next month's sales. Beginning inventory (March 1) is 5,300 suitcases.
Each suitcase required 1.5 meters of ballistic nylon. The ending inventory policy for nylon is that 20% of the following month's production needs must be on hand. On March 1, Varney had 10,450 meters of nylon in inventory.
Required:
3.1 What is the desired ending inventory of suitcases for April? (1)
3.2 What is the budgeted production of suitcases for April? (1)
3.3 What is the desired ending inventory of nylon for March? (1)
3.4 What are the budgeted meters of nylon to be purchased in March? (1)
3.5 Assuming each suitcase required two meters of ballistic nylon, what is the desired ending inventory of nylon for March? (1)
Varney Company makes rolling suitcases. Its sales budget for four months is: Month
Sales
R
March
15,000
April
20,000
May
40,000
June
60,000
Explanation / Answer
3.1 : Desired ending inventory of suitacases for April : 12,000
3.2: Budgeted production for April : 26,000
3.3 : Desired ending inventory of nylon for March : 7,800 meters
3.4 : Budgeted meters of nylon to be purchased in March : 20,900 meters.
3.5 : Desired ending inventory of nylon for March : 10,400 meters.
Varney Company
Production Budget:
Direct Materials Budget:
March April May Budgeted Sales 15,000 20,000 40,000 Desired Ending Inventory 6,000 12,000 18,000 Total Needs 21,000 32,000 58,000 Less: Beginning Inventory 5,300 6,000 12,000 Budgeted Production 15,700 26,000 46,000Related Questions
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