Task:
Safe and Bright Inc produces outside doors for installation on homes. The following information was gathered to prepare budgets for the upcoming year beginning Jan 1:
Sales force in units...........................................................................5,500 doors
Finished goods inventory Jan 1......................................................... 620 doors
Targe finished good inventory Dec 31............................................... 480 doors
Raw materials inventory-steel Jan 1.................................................. 40,000 pounds
Target inventory-steel Dec 31............................................................ 80,000 pounds
Raw material inventory-glass Jan 1.....................................................6,000 sq feet
Target inventory-glass Dec 31............................................................ 4,000 sq feet
Budgeted purchase price-steel.............................................................$4 per pound
Budgeted purchase price-glass........................................................... $2 per sq foot
The manufacture of each door requires 20 pounds of steel and 6 square feet of glass.
Q1. Prepare the production schedule in units for Safe and Bright.
Q2. Using the production schedule develop the direct materials purchase budgets for steel and glass.
Q3. Why might Safe and Bright target level of steel inventory be higher than last years ending balance and its target level of glass inventory be lower than last years ending balance?