Safe' n' Bright, inc., produces outside doors for installation on homes. The following information was gathered to prepare budgets for the upcoming year beginning January 1:
Sales forecast inunits...............................................................5,500doors
Finished goods inventory, Jan.1...................................................620doors
Target finished goods inventory, Dec.31.......................................480doors
Raw materials inventory-steel, Jan1..........................................40,000pounds
Target inventory-steel, Dec.31................................................80,000pounds
Raw materials inventory-glass, Jan.1.......................................6,000square feet
Target inventory-glass, Dec.31.............................................4,000square feet
Budgeted purchaseprice-steel................................................$4per pound
Budgeted purchaseprice-glass.............................................$2per square foot
The manufacture of each door requires 20 pounds of steel and 6square feet of glass.
- Prepare the production schedule in units for safe'n' Bright.
- Using the production schedule, develop the direct materials purchase budgets for steel and glass.
- Why might safe 'n' Blight's target level of steel inventory be higher than last year's ending balance and its target level of glass inventory be lower than last year's ending balance?