Question

Production and Purchases Budgets At the beginning of October, Comfy Cushions had 2,600 cushions and 15,500 pounds of raw materials on hand. Budgeted sales for the next three months are: Month Sales October 13,000 cushions November 15,000 cushions December 18,000 cushions Comfy Cushions wants to have sufficient raw materials on hand at the end of each month to meet 25 percent of the following month's production requirements and sufficient cushions on hand at the end of each month to meet 20 percent of the following month's budgeted sales. Five pounds of raw materials, at a standard cost of $0.90 per pound, are required to produce each cushion. Required a. Prepare a production budget for October and November. Do not use a negative sign with your answers.

Answer 1

Production budget for October and November

October November

cushions cushions

Budgeted Sales 13,000 15,000

Add Budgeted Closing Inventory 3,000 3,600

Total Production needed 16,000 18,600

Less Budgeted Opening Inventory (2,600) (3,000)

Production Budget 13,400 15,600

Step-by-step explanation:

A Production Budget shows the quantities of finished goods that must be produced to meet expected sales plus any increase in inventory levels that might be required.