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 April May une July Unit Sales 84,000 90,000 124,000 97,000 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 20% of the following month's unit sales. The inventory at the end of March was 16,800 units Requirec Prepare a production budget by month and in total, for the second quarter. Down Under Products, Ltd. Production Budget April May June Quarter Budgeted units sales Total needs Required production in units 0

Explanation / Answer

Production budget :

April May June Quarter Budgeted unit sales 84000 90000 124000 298000 Add; Desired ending inventory 18000 24800 19400 19400 Total needs 102000 114800 143400 317400 Less: Beginning inventory -16800 -18000 -24800 -16800 Required production in units 85200 96800 118600 300600

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