Question

Rucker Company manufactures drinking glasses. One unit is a package of eight classes, which sells for $14. Rucker projects sales for April will be 1,500 pages with sales increasing by 50 packages per month for May, June, and July. On April 1, Rucker has 25 packages on hand but desires to maintain an ending inventory of 10% of the next month's sales. Prepare a sales budget and a production budget for Rucker for April, May, and June.

Rucker Company manufactures drinking glasses. One unit is a package of eight glasses, which sells for $14. Rucker projects sales for April will be 1,500 packages, with sales increasing by 50 packages per month for May, June, and July. On April 1, Rucker has 225 packages on hand but desires to maintain an ending inventory of 10% of the next month's sales. Prepare a sales budget and a production budget for Rucker for April, May, and June. Begin by preparing a sales budget for April, May, and June. Rucker Company Sales Budget April, May, and June April May June Total Budgeted packages to be sold 1,500 4,650 1,550 14 1,600 14 Sales price per package $ $ $ $ 21,000 $ 21,700 $ 22,400 $ 65,100 Total sales Now prepare a production budget for April, May, and June. May June Total Rucker Company Production Budget April, May, and June April Budgeted packages to be sold 1500 Plus: Desired packages in ending inventory Total packages needed Less: Packages in beginning inventory 1550 | 1600 4650 Budgeted packages to be produced

Answer 1

Solution

Rucker Company

1. Sales Budget

	Rucker Company
	Sales Budget
	April	May	June	Total
Budgeted sales	1,500	1,550	1,600	4,650
Unit Selling Price	$14	$14	$14	$14
Total Sales	$21,000	$21,700	$22,400	$65,100

2. Production Budget

	Rucker Company
	Production Budget
	April	May	June
Budgeted sales	1,500	1,550	1,600
Add: ending inventory, packages	155	160	165
Total packages needed	1,655	1,710	1,765
Less: beginning inventory, packages	225	155	160
Budgeted packages to be produced	1,430	1,555	1,605

Calculations –

Ending inventory –

April = 10% of may sales = 1,550 x 10% = 155

May = 1,600 x 10% = 160

June = 1,650 x 10% = 165

Beg. Inventory = ending inventory of previous month

April = given in Pb as 225 packages

May = 155

June = 160