Budget and Capital Decisions Exercise - Preparing Operating Budgets
Snip and Chip Inc. sells silk upholstery curtains for $150 each. The project's budgeted unit sales for four months during the current year appear below:
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February
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$39,000
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April
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$42,000
|
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May
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$44,000
|
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June
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$40,000
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Additional information:
- The project desires to have an inventory at the end of each month equal to 15 percent of the following month's budgeted unit sales.
- Each curtain requires 2.0 yards of fabric.
- At the end of each month, the project decides to have 20 percent of the production material required for the next month on hand.
- The fabric costs $25 per yard. Each curtain produced requires 1 hour of direct labor.
- The project pays $27 per hour to its employees.
Prepare the following budgets for the project:
Production budget for the month of April
Materials purchase budget for April.