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Question - Bags, Inc. manufactures leather bags with 3 zipper-type pockets. The company outsources the zippers at P8 per unit. Each bag requires 5 direct labor hours to produce at a rate of P10 per hour. Budgeted sales of bags for the first quarter of the year and the first month of the following are as follows:
January 900 units
February 1,000 units
March 1,500 units
April 1,800 units
Inventory data are as follows:
January 1: Leather bags 360
Zipper 1,620
End of each month:
Leather bags - 40% of the following month's budgeted sales
Zipper - 60% of the following month's production requirement
Required - What is the budgeted production of leather bags for the first quarter?
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