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Wammy Company Makes Rolling Suitcases The Company's Policy Is That Ending Finished Goods Inventory Should

Question 130

Essay

Wammy Company makes rolling suitcases. Its sales budget for four months is as follows:  Month  Unit Sales  March 15,000 April 20,000 May 40,000 June 60,000\begin{array} { l r } \text { Month } & \text { Unit Sales } \\\text { March } & 15,000 \\\text { April } & 20,000 \\\text { May } & 40,000 \\\text { June } & 60,000\end{array} The company's policy is that ending finished goods inventory should equal 30% of the next month's sales. Beginning finished goods inventory (March 1) is 5,300 suitcases.
Each suitcase required 1.5 metres of ballistic nylon. The ending direct materials inventory policy for nylon is that 20% of the following month's production needs must be on hand. On March 1, Wammy had 10,450 metres of nylon in direct materials inventory.
Required:
A. Calculate the desired ending finished goods inventory of suitcases for April.
B. Calculate the budgeted production of suitcases for April.
C. Calculate the desired ending direct materials inventory of nylon for March.
D. Calculate the budgeted metres of nylon to be purchased in March.
E. Assuming each suitcase required 2 metres of ballistic nylon, calculate the desired ending direct materials inventory of nylon for March.

Correct Answer:

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A. 12,000 (see table below)
B....

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