Bandamere Lighting Inc. uses the sales forecast to plan production. The company

Question

Bandamere Lighting Inc. uses the sales forecast to plan production. The company produces the magnetic light bulb called "Brightminus1" one month in advance of the forecasted sale. The January sales forecast of 38 units of these bulbs will be scheduled for December production. However, the company also notes that sales forecasts and actual sales can differ, and the company has precisely calculated that it needs about 18.42% in inventory to accommodate sales above forecast. Raw materials for Brightminus1 are acquired the month ahead (in this case, November). Wages are paid in the current month of production (December). Utilities are paid a month after production (January), and shipping is paid a month after the sale (two months after production, February). Finally, an inventory count reveals that there are currently 3 units on hand above the projected sales for November (at the start of November when the raw material order is placed). Unit production costs are $50 for raw materials, $30 for wages, $20 for utilities, and $10 for shipping. Determine the cash outflows for December's production.

Explanation / Answer

Total Quantity Required = 38 units x 1.1842 = 45 units
Excessive Inventory in November = 3 Units
Total Production Required = 45 – 3 = 42 Units

Cash Outflow for Production in December = Wages + Utilities for November + Raw Material for January + Shipping for October

Cash Outflow for Production in December = (42*30) + Utilities for November + Raw Material for January + Shipping for October

Remaining figures can’t be obtained from the information provided. So, please put the values and calculate the figure. Alternatively, you can provide the figure for complete anser.

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