Tonga toys manufactures and distributes a number of

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Reference no: EM13579349

Tonga Toys manufactures and distributes a number of products to retailers. One of these products, Playclay, requires two pounds of material A135 in the manufacture of each unit. The company is now planning raw materials needs for the third quarter%u2014July, August, and September. Peak sales of Playclay occur in the third quarter of each year. To keep production and shipments moving smoothly, the company has the following inventory requirements:

a.	The finished goods inventory on hand at the end of each month must be equal to 8,000 units plus 33% of the next month%u2019s sales. The finished goods inventory on June 30 is budgeted to be 19,880 units.
b.	The raw materials inventory on hand at the end of each month must be equal to one-half of the following month%u2019s production needs for raw materials. The raw materials inventory on June 30 for material A135 is budgeted to be 39,300 pounds.
c.	The company maintains no work in process inventories.

A sales budget for Playclay for the last six months of the year follows.

	Budgeted Sales in Units
July	36,000
August	46,000
September	66,000
October	31,000
November	16,000
December	6,000

Required:
1.	Prepare a production budget for Playclay for the months July, August, September, and October. (Input all amounts as positive values. Do not round intermediate calculations.)

Reference no: EM13579349

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