Reference no: EM132260821

Assignment: No Plagiarism. 3-4 pages Discussing the 2 following question below.

Chicago Furniture Company produces combination desk and chair sets for the elementary schools in the Midwest. As the second quarter is progressing it is important for the controller to complete a budget for the third quarter. The sales department manager has provided the following forecast.

July	8000	desk combos
August	8700	desk combos
September	7600	desk combos
October	8700	desk combos
November	8800	desk combos

• In order to ensure Just-in-Time (JIT) deliveries are maintained in accordance with the needs of the schools Chicago Furniture Company has a standing policy that the inventory at the end of each month must be equal to 40% of the following month's forecasted sales. On July 1st there will be 3,200 desk combos in inventory.

• The building of each desk combo requires 12 board feet of pine planks which cost $0.70 per foot. In order to maintain proper inventory for building the desk combos the department must have 30% of the next month's production requirements.

Using the information you developed in Submission Lesson #1, write 3-4 pages discussing the following:

• Why is the preparation of a sales forecast one of the earliest steps in preparing a master budget?

• Explain at least three ways a company can benefit from preparing a formal budget.