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23. Brenda, Inc. makes wooden tables. Each table requires 28 pounds of lumber to produce. The...

Question:

23. Brenda, Inc. makes wooden tables. Each table requires 28 pounds of lumber to produce. The sales forecast for March is 1,600 tables. Estimated beginning and desired ending inventories for March are the following:

Estimated Beginning Inventory Desired Ending Inventory
Tables 500 720
Lumber (pounds) 18,000 20,500

(a.) Calculate the number of tables to be produced in March.

(b.) Calculate the number of pounds of lumber to be purchased in March.

Answer and Explanation:

Answer:

(a.) The number of tables to be produced in March is 1,820 tables.

Explanation:

Brenda Inc. provided that:

  • Estimated Beginning Inventory of tables = 500 tables
  • Desired Ending Inventory of tables = 720 tables
  • Tables budgeted to be sold = 1,600 tables

Formula:

Number of tables to be produced = Tables budgeted to be sold + Desired Ending Inventory of tables - Estimated Beginning Inventory of tables

Number of tables to be produced = 1,600 tables + 720 tables - 500 tables

Number of tables to be produced = 1,820 tables

(b.) The number of pounds of lumber to be purchased in March is 47,300 pounds.

Explanation:

Brenda Inc. provided that:

  • Estimated Beginning Inventory of lumber = 18,000 pounds
  • Desired Ending Inventory of lumber = 20,500 pounds
  • One unit of the table requires 28 pounds of lumber
  • Estimated sales = 1,600 tables

Formula:

Number of pounds of lumber to be purchased = Pounds of lumber required for budgeted units to be sold + Desired Ending Inventory of lumber - Estimated Beginning Inventory of lumber

Number of pounds of lumber to be purchased = (1,600 tables * 28 pounds) + 20,500 pounds - 18,000 pounds

Number of pounds of lumber to be purchased = 47,300 pounds


Learn more about this topic:

Production Budget: Preparation & Examples

from Accounting 301: Applied Managerial Accounting

Chapter 11 / Lesson 5
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