Iam not looking for answers, but more around the concept to do this question. How would i approach it?
A sales budget is given below for one of the products manufactured
The inventory of finished goods at the end of each month must equal 25% of the next month's sales.
Each unit of product requires four metres of material. GH Inc. has a policy of maintaining an ending inventory at the end of each month equal to 30% of the next month's production needs.
Required:
Prepare a budget showing the quantity of material to be purchased each month for January, February, and March, and in total for the quarter.
A sales budget is given below for one of the products manufactured
| January | 40,000 units |
| February | 25,000 units |
| March | 60,000 units |
| April | 48,000 units |
| May | 55,000 units |
| June | 53,000 units |
The inventory of finished goods at the end of each month must equal 25% of the next month's sales.
Each unit of product requires four metres of material. GH Inc. has a policy of maintaining an ending inventory at the end of each month equal to 30% of the next month's production needs.
Required:
Prepare a budget showing the quantity of material to be purchased each month for January, February, and March, and in total for the quarter.