Discuss the below in detail:
Q: Brian Furniture, Inc. manufactures a variety of desks, chairs, tables, and shelf units which are sold to public school systems throughout the Midwest. The controller of the company's School Desk Division is currently preparing a budget for the second quarter of 2012. The following sales forecast has been developed by the division's sales manager:
May 7500 desk and chair sets
June 9000 desk and chair sets
July 8700 desk and chair sets
August 8800 desk and chair sets
The inventory of finished desk and chair sets at the end of each month must be equal to 30% of the budgeted sales for the next month. On April 1, there will be 1,950 units of desk and chair sets on hand.
Work-in-process inventories are negligible and can be safely ignored.
Each desk and chair set requires 10 board feet of pine planks. Pine planks cost $0.75 per board foot, and the division ends each month with enough pine to cover 20% of the next month's production requirements. This requirement will be met on April 1 of 2012.
Required:
Prepare a production budget and a materials purchases budget for April, May, and June and in total for the three-month period.