Select your language

Suggested languages for you:
Log In Start studying!
Answers without the blur. Just sign up for free and you're in → Illustration

Q23E

Expert-verified
Horngren'S Financial And Managerial Accounting
Found in: Page 1233

Short Answer

Preparing an operating budget—sales and production budgets

Lugo Company manufactures drinking glasses. One unit is a package of eight glasses, which sells for $30. Lugo projects sales for April will be 2,000 packages, with sales increasing by 250 packages per month for May, June, and July. On April 1, Lugo has 325 packages on hand but desires to maintain an ending inventory of 20% of the next month’s sales. Prepare a sales budget and a production budget for Lugo for April, May, and June.

Answer

Budgeted tablets to be produced

2,125

2,300

2,550

2,800

Budgeted sales revenue

$60,000

$67,500

$75,000

$82,500

See the step by step solution

Step by Step Solution

Step 1: Preparation of sales budget

April

May

June

July

No. of units to be sold

2,000

2,250

2,500

2,750

Selling price per unit

X $30

X $30

X $30

X $30

Budgeted sales revenue

$60,000

$67,500

$75,000

$82,500

Step 2: Preparation of production budget

April

May

June

July

No. of units to be sold

2,000

2,250

2,500

2,750

Plus: Desired tablets in ending inventory

450

500

550

600

Total units needed

2,450

2,750

3,050

3,350

Less: Tablets in beginning inventory

325

450

500

550

Budgeted tablets to be produced

2,125

2,300

2,550

2,800

Most popular questions for Business-studies Textbooks

Icon

Want to see more solutions like these?

Sign up for free to discover our expert answers
Get Started - It’s free

Recommended explanations on Business-studies Textbooks

94% of StudySmarter users get better grades.

Sign up for free
94% of StudySmarter users get better grades.