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Berring Company produces two products: the deluxe and the standard. The deluxe sells for $40, and the standard sells for $10. Projected sales of the two models for the coming four quarters are given below. The president of the company believes that the projected sales are realistic and can be achieved by the company. In the factory, the production supervisor has received the projected sales figures and gathered information needed to compile production budgets. He found that 1,300 deluxes and 1,170 standards were in inventory on January 1. Company policy dictates that ending inventory should equal 20 percent of the next quarter’s sales for deluxes and 10 percent of next quarter’s sales for standards. Required: 1. Prepare a sales budget for each quarter and for the year in total. Show sales by product and in total for each time period. 2. What factors might Berring Company have considered in preparing the sales budget? 3. Prepare a separate production budget for each product for each of the first three quarters of the year.

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Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663

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Section
BuyFindarrow_forward

Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663
Chapter 8, Problem 16E
Textbook Problem
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Berring Company produces two products: the deluxe and the standard. The deluxe sells for $40, and the standard sells for $10. Projected sales of the two models for the coming four quarters are given below.

Chapter 8, Problem 16E, Berring Company produces two products: the deluxe and the standard. The deluxe sells for 40, and the

The president of the company believes that the projected sales are realistic and can be achieved by the company. In the factory, the production supervisor has received the projected sales figures and gathered information needed to compile production budgets. He found that 1,300 deluxes and 1,170 standards were in inventory on January 1. Company policy dictates that ending inventory should equal 20 percent of the next quarter’s sales for deluxes and 10 percent of next quarter’s sales for standards.

Required:

  1. 1. Prepare a sales budget for each quarter and for the year in total. Show sales by product and in total for each time period.
  2. 2. What factors might Berring Company have considered in preparing the sales budget?
  3. 3. Prepare a separate production budget for each product for each of the first three quarters of the year.

1.

To determine

Prepare a sales budget for each quarter and for the year in total.

Explanation of Solution

Sales budget: This budget is prepared by the organization for the yearly or monthly basis as per need. It includes all the estimated revenues from the entire operating source.

Sales budget is prepared to estimate or project the sales in dollars and units for a particular period of time...

2.

To determine

Indicate the factors considered by b Company in preparing the sales budget.

3.

To determine

Prepare a production budget for each product and for the first three quarters of the year.

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Chapter 8 Solutions

Cornerstones of Cost Management (Cornerstones Series)
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