Alpine Slopes, Inc. produces freestyle snowboards designed for use on all mounta

Question

Alpine Slopes, Inc. produces freestyle snowboards designed for use on all mountain terrain. Production for 2012, the first year of operations, was budgeted at 2,000 snowboards. However, sales have far exceeded predictions. Therefore, in preparing the 2013 budget Alpine is projecting sales of 150% of the amount budgeted for 2012. Alpine plans to continue selling the snowboards for $250.

1) Prepare a sales budget for Alpine for the year 2013.

2) Alpine likes to keep an ending inventory equal to 10 percent of next quarter’s sales. Sales in the first quarter of 2014 are budgeted to be 1,080 units. On January 1, 2013, there were 90 snowboards in the finished good inventory. Prepare a production budget for Alpine for 2013.

Explanation / Answer

1) Production units for 2013 (2000*150%) = 3000 snowboards

Sales budget 3000 snowboards * $ 250 = $ 750000

2) 10% of next quarter sales 1080 units * 10% = 108 snowboards

beginning goods in inventory 90 snowboards

Sales budget 3000 snowboards

production of snowboard 3018 snowboards

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