Question

Bombs Away Video Games Corporation has forecasted the following monthly sales:

January $113,000 July $58,000
February 106,000 August 58,000
March 38,000 September 68,000
April 38,000 October 98,000
May 33,000 November 118,000
June 48,000 December 136,000

Bombs Away Video Games sells the popular Strafe and Capture video game. It sells for $5 per unit and costs $2 per unit to produce. A level production policy is followed. Each month's production is equal to annual sales (in units) divided by 12. Of each month's sales, 40 percent are for cash and 60 percent are on account. All accounts receivable are collected in the month after the sale is made.

Required:
Construct a monthly production and inventory schedule in units. Beginning inventory in January is 38,000 units.

Answer 1

Bombs Away Video Games Corporation

Production and Inventory Schedule

Sales Units Production units Ending Units

Beginning inventory 38,000

January 22,600 15,200 30,600

February 21,200 15,200 24,600

March 7,600 15,200 1,800

April 7,600 15,200 9,400

May 6,600 15,200 18,000

June 9,600 15,200 23,600

July 11,600 15,200 27,200

August 11,600 15,200 30,800

September 13,600 15,200 32,400

October 19,600 15,200 28,000

November 23,600 15,200 19,600

December 27,200 15,200 7,600

Step-by-step explanation:

a) data and Calculations:

Sales Budget ($'000) Sales Units Production units Ending Units

Beginning inventory 38,000

January $113,000 22,600 15,200 30,600

February 106,000 21,200 15,200 24,600

March 38,000 7,600 15,200 1,800

April 38,000 7,600 15,200 9,400

May 33,000 6,600 15,200 18,000

June 48,000 9,600 15,200 23,600

July 58,000 11,600 15,200 27,200

August 58,000 11,600 15,200 30,800

September 68,000 13,600 15,200 32,400

October 98,000 19,600 15,200 28,000

November 118,000 23,600 15,200 19,600

December 136,000 27,200 15,200 7,600

Total 182,400 182,400