Solution-Prepare a budget showing the cost of switches

Prepare a budget showing the cost of switches

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Reference no: EM132975936

Question - A sales budget is given below for one of the products manufactured by the Key Company: January 21,000 units February36,000 units March 61,000 units April 41,000 units May 31,000 units June 25,000 units The inventory of finished goods at the end of each monthquestion 2.png should equal 20% of the next month's sales. However, on December 31 the finished goods inventory totaled only 4,000 units. Each unit of product requires three specialized electrical switches. Since the production of these specialized switches by Key's suppliers is sometimes irregular, the company has a policy of maintaining an ending inventory at the end of each month equal to 30% of the next month's production needs. The cost per electrical switch is $2. This requirement had been met on January 1 of the current year.

Required -

a. Prepare a budget showing the required production each month for January, February, March, and April.

b. Prepare a budget showing the cost of switches to be purchased each month for January, February, and March.

Reference no: EM132975936

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Prepare a budget showing the cost of switches

Reference no: EM132975936

Reference no: EM132975936

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