Down Under Products, Ltd., of Australia has budgeted sales of its popular boomer

Question

Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows: Sales in Units April 50,000 May 75,000 June 90,000 July 80,000 The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month inventory levels must equal 10% of the following month's sales. The inventory at the end of March was 5,000 units. Required: Show the number of units to be produced each month and for the quarter in total. Required Production April May June Quarter

Explanation / Answer

production in april =90% * 50000+10%*75000=52500 production in may=90% *75000+10%*90000=76500 production in june=90%*90000+10%*80000=89000 production of quarter=52500+76500+89000=218000

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