Novak Company manufactures drinking glasses. One unit is a package of eight glas

Question

Novak Company manufactures drinking glasses. One unit is a package of eight glasses, which sells for $22. Novak projects sales for April will be 1,000 packages, with sales increasing by 350 packages per month for May, June, and July. On April 1 Novak has 100 packages on hand but desires to maintain an ending inventory of 20% ofthe next month's sales. Prepare a sales budget and a production budget or Novak or April, May, and June Begin by preparing a sales budget for April, May, and June. Novak Company Sales Budget April, May, and June April May June Total Budgeted packages to be sold Sales price per package Total sales Now prepare a production budget for April, May, and June. Novak Company Production Budgot April, May, and June April May June Total Plus: Total packages needed Less: Budgeted packages to be produced

Explanation / Answer

Novak Company

Sales Budget

April, May and June

April May June Total

Budgeted packages to be sold 1,000 1,350 1,700 4,050

Sales price per package $22 $22 $22 $22

Total sales $ 22,000 $ 29,700 $ 37,400 $ 89,100

Novak Company

Production Budget

April, May and June

April May June Total

Budgeted packages to be sold 1,000 1,350 1,700 4,050

Plus: Desired packages in ending

inventory 270 340 410 410

Total packages needed 1,270 1,690 2,110 4,460

Less: Packages in beginning

inventory (100) (270) (340) (100)

Budgeted packages to be produced 1,170 1,420 1,770 4,360

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