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Question - Bears Builders has developed the following sales forecasts for the next few months. April 500, May 600, June 720, July 800 and August 770. BB has 80 bears on hand on Dec. 31. Normal ending inventory policy is to hold 20% of next month's sales.
Each bear needs 0.8 yards of fur and two pounds of stuffing. Fur is budgeted to cost $15 per yard and stuffing $4 per pound. Direct labor is paid $18 per hour. Each bear takes 40 minutes to hand-finish. Variable overhead totals $21 per direct labor hour. Fixed overhead amounts to $25,000 per month.
Eighty yards of fur and 100 pounds of stuffing were in stock at year-end. Ten percent and 25% of next month's stuffing and fabric needs respectively are planned for raw materials ending inventory each month.
Required - How many bears must be produced in May?
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