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Question - Masons Homeware is a furniture manufacturing company in Southern Tasmania. Every year the company prepares a complete set of budgets. The budgeting process begins with information supplied by the Sales and Marketing Department.
The Sales and Marketing Department has predicted unit sales for wooden tables to be as follows:
Month
January
February
March
April
May
Sales
33,000
42,000
45,000
40,000
37,000
The balance in inventory at the beginning of the year was 17 000 tables. The company plans to have inventory at the end of the month equal to 40% of the following month's sales.
Each table requires 2.5 square metres of wood. The amount of wood in inventory at the beginning of the year was 40,000 square metres. The company plans to have an inventory at the end of the month equal to 30% 0f the following month's production. The average cost of wood is $10 per square metre.
Required - Prepare a Production and Materials budget for the tables for the ?rst three months of the year and a total for the quarter ending March.
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