Production Budget Chrystal Telecom has budgeted the sales of its innovative mobi

Question

Production Budget

Chrystal Telecom has budgeted the sales of its innovative mobile phone over the next four months as follows:

The company is now in the process of preparing a production budget for the third quarter.  Past experience has shown that end-of-month finished goods inventories must equal 10% of the next month%u2019s sales.  The inventory at the end of Jun was 3,000 units.

Required:

Prepare a production budget for the third quarter showing the number of units to be produced each month and for the quarter in total.

Explanation / Answer

Hi,

Please find the answer as follows;

Ending Inventory is 10% of anticipate sales for the next month.

Thanks.

July August September Quarter Budgeted Sales 30000 45000 60000 135000 Desired Ending Inventory 4500 6000 5000 5000 Total Units Desired 34500 51000 65000 140000 Less Opening Inventory 3000 4500 6000 3000 Production 31500 46500 59000 137000

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