The Suzuki Co. in Japan has a division that manufactures...

The Suzuki Co. in Japan has a division that manufactures two-wheel motorcycles. Its budgeted sales for Model $G$ in 2013 is 900,000 units. Suzuki's target ending inventory is 80,000 units, and its beginning inventory is 100,000 units. The company's budgeted selling price to its distributors and dealers is 400,000 yen ( $¥$ ) per motorcycle. Suzuki buys all its wheels from an outside supplier. No defective wheels are accepted. (Suzuki's needs for extra wheels for replacement parts are ordered by a separate division of the company.) The company's target ending inventory is 60,000 wheels, and its beginning inventory is 50,000 wheels. The budgeted purchase price is 16,000 yen ( $¥$ ) per wheel. 1. Compute the budgeted revenues in yen. 2. Compute the number of motorcycles to be produced. 3. Compute the budgeted purchases of wheels in units and in yen.

The Suzuki Co. in Japan has a division that manufactures two-wheel motorcycles. Its budgeted sales for Model $G$ in 2013 is 900,000 units. Suzuki's target ending inventory is 80,000 units, and its beginning inventory is 100,000 units. The company's budgeted selling price to its distributors and dealers is 400,000 yen ( $¥$ ) per motorcycle.
Suzuki buys all its wheels from an outside supplier. No defective wheels are accepted. (Suzuki's needs for extra wheels for replacement parts are ordered by a separate division of the company.) The company's target ending inventory is 60,000 wheels, and its beginning inventory is 50,000 wheels. The budgeted purchase price is 16,000 yen ( $¥$ ) per wheel.
1. Compute the budgeted revenues in yen.
2. Compute the number of motorcycles to be produced.
3. Compute the budgeted purchases of wheels in units and in yen.

Key Concepts

Materials Purchase Planning

Materials purchase planning is the process of estimating the quantity of raw materials needed for production. It involves adjusting the materials required for the planned production with considerations for the beginning and target ending inventories of the materials, ensuring that procurement is both efficient and cost-effective.

Inventory Management

Inventory management is the strategic approach to planning and controlling the levels of stock, including both raw materials and finished goods, to balance supply with demand. This concept is crucial for minimizing holding costs and avoiding stockouts, ensuring that production and sales processes run smoothly.

Budgeted Revenues

The budgeted revenues concept involves forecasting the total income from sales by multiplying the estimated sales volume by the unit selling price. This projection is key for planning and decision-making as it provides insight into expected cash inflows and financial performance over a specific period.

Production Budgeting

Production budgeting involves determining the number of units that need to be manufactured to meet both expected sales and desired inventory levels. This process takes into account the beginning inventory, sales forecasts, and target ending inventory to ensure that production is aligned with market demand while maintaining optimal stock levels.

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