Question

Asian Lamp Company manufactures lamps. The estimated number of lamp sales for the last three months for the current year are as follows: Month Sales

October 10,000
November 14,000
December 13,000
Finished goods inventory at the end of September was 3,000 units. Ending finished goods inventory is budgeted to equal 25 percent of the next month's sales. Asian Lamp expects to sell the lamps for $25 each. January sales is projected at 16,000 lamps.
In going from the sales budget to the production budget, adjustments to the sales budget need to be made for
a. cash receipts.
b. finished goods inventories.
c. factory overhead costs.
d. selling expenses

Answer 1

Asian Lamp Company

In going from the sales budget to the production budget, adjustments to the sales budget need to be made for

b. finished goods inventories.

Step-by-step explanation:

a) Data and Calculations:

Sales Budget October November December January

Ending inventory 3,500 3,250 4,000

Estimated sales units 10,000 14,000 13,000 16,000

Units available for sale 13,500 17,250 17,000

Beginning inventory 3,000 3,500 3,250 4,000

Production units 10,500 13,750 13,750