Turney Company produces and sells automobile batteries, the heavy-duty HD-240. T
ID: 2344735 • Letter: T
Question
Turney Company produces and sells automobile batteries, the heavy-duty HD-240. The 2010 sales budget is as follows.Quarter HD-240
1 5,000
2 7,000
3 8,000
4 10,000
The January 1, 2010, inventory of HD-240 is 2,500 units. Management desires an ending inventory each quarter equal to 50% of the next quarter's sales. Sales in the first quarter of 2011 are expected to be 30% higher than sales in the same quarter in 2010.
Complete quarterly production budgets for each quarter and in total for 2010.
TURNEY COMPANY
Production Budget
For the Year Ending December 31, 2010
Product HD-240
Quarter
1
2
3
4
Year
Expected unit salesDesired end. finished goods unitsBeg. finished goods units
Add: Desired end. finished goods unitsExpected unit salesBeg. finished goods units
Total required units
Less: Beg. finished goods unitsExpected unit salesDesired end. finished goods units
Required production units
Explanation / Answer
4)Less: Beginning finished goods units (its ending finished goods from last quarter)
1)Expected Sales are from the table you provided.
2) its half of previous so Q2 has expected units sale of 7000, Q1 will have desired ending finshed goods of 7000/2 = 3500. and same thing for Q2, and Q3.
As for Q4 instructions are "Sales in the first quarter of 2011 are expected to be 30% higher than sales in the same quarter in 2010" so Q1 in 2010 has 5000 units so expected units in Q1 of 2011 will be 130% of Q1 2010. So 5000*1.30 = 6500. Therefore Q4 will have Desired ending finished goods units of 6500/2 = 3250.
3) This one is just adding Expected sales + Desired ending finished goods units
4) its ending finished goods from last quarter, as for Q1 it is given that starting inventory of 2500 at the beginning of 2010.
5) Total required units + Beginning finished goods units
Hope this helps, and if you need more help comment.
Quarters 1 2 3 4 Year 1)Expected unit sales 5,000 7,000 8,000 10,000 2)Add: Desired ending finished goods units (half of the next quarter) 3,500 4,000 5,000 3,250 3)Total required units (expected units sales + Desired ending finished goods units) 8,500 11,000 13,000 13,2504)Less: Beginning finished goods units (its ending finished goods from last quarter)
2,500 3,500 4,000 5,000 5)Required production units (Total required units + Beginning finished goods units ) 6,000 7,500 9,000 8,250 30,750Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.