(A)A sales budget is given below for one of the products manufactured by the Key Company.
January 21,000 units
February 36,000 units
March 61,000 units
April 41,000 units
May 31,000 units
June 25,000 units
The inventory of finished goods at the end of each month should equal 20% of the next
month's sales. On December 31, the finished goods inventory totaled 4,000 units.
Required: Show all calculations and present your work in good accounting form as
illustrated in the lectures.
Prepare a budget showing the required production each month for January, February, March,
and April.
(16 marks)
(B) (a) Prentice Company is considering dropping one of its product lines. What costs of the
product line would be relevant to this decision? What costs would be irrelevant? (2 marks)
(b) Define the following terms: joint costs, and split-off point.
(2 marks)