Block, S., Hirt, G., & Danielsen, B. (2017). Foundations of Financial Management. New York, NY: McGraw-Hill Education. 16th edition. Chapter 6 - Problem #5 Antonio Banderos & Scarves makes headwear that is very popular in the fall winter season. Units sold are anticipated as follows: October 1,250 November 2,250 December 4,500 January 3,500 TOTAL: 11,500 units If seasonal production is used, it is assumed that inventory will directly match sales for each month and there will be no inventory buildup. However, Antonio decides to go with level production to avoid being out of merchandise. He will produce the 11,500 items over four months at a level of 2,875 per month. A. What is the ending inventory at the end of each month? Compare the units sales to the units produced and keep a running total. B. If the inventory costs $8 per unit and will be financed at the bank at a cost of 12 percent, what is the monthly financing costs and the total for the four months? (Use 1 percent or the monthly rate). Thank you in advance!
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Block, S., Hirt, G., & Danielsen, B. (2017). Foundations of Financial Management. New York, NY: McGraw-Hill Education. 16th edition.
Chapter 6 - Problem #5
Antonio Banderos & Scarves makes headwear that is very popular in the fall winter season. Units sold are anticipated as follows:
October 1,250
November 2,250
December 4,500
January 3,500
TOTAL: 11,500 units
If seasonal production is used, it is assumed that inventory will directly match sales for each month and there will be no inventory buildup. However, Antonio decides to go with level production to avoid being out of merchandise. He will produce the 11,500 items over four months at a level of 2,875 per month.
A. What is the ending inventory at the end of each month? Compare the units sales to the units produced and keep a running total.
B. If the inventory costs $8 per unit and will be financed at the bank at a cost of 12 percent, what is the monthly financing costs and the total for the four months? (Use 1 percent or the monthly rate).
Thank you in advance!
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