Master Budgets Chapter 22 Exercises

Operating Budgets In-Class Exercise (Form groups and work exercise): Exercise No. Page E22-24 1189 Sales & Production Budgets (Use the format, as reflected on the next slide, to begin this exercise)

Sales Budget

Sales Budget Exercise E22-24: Use the following information to prepare a sales and a production budget for the months of April, May, and June. (a) Gorman Company manufactures drinking glasses. (b) One unit is a package of 8 glasses. (c) Each package of glasses sell for $35. (d) Projected sales for April will be 5,500 packages, with sales increasing by 450 packages per month for May, June, and July. (e) On April 1, Gorman has 125 packages on hand, but desires to maintain an ending inventory of 10% of the next month’s sales.

Sales Budget

Operating Budgets Production Budget (Use the format, as reflected on the next chart, to work this part of the exercise)

Production Budget Data from Part 1

10% of next month’s sales (5,950 x 10% = 595) Production Budget 10% of next month’s sales (5,950 x 10% = 595)

Production Budget

Production Budget

Production Budget

Production Budget End of Exercise