Exercises Part A Help Down Under Products, Ltd., of Australia has budgeted sales
ID: 2400646 • Letter: E
Question
Exercises Part A Help Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows: 80,000 90,000 120,000 95,000 May 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 unit sales. The inventory at the end of March was 8,000 units. Prepare a production budget by month and in total, for the second quarter Production Budget April Bud in units K Prev 2 of 3E Next >Explanation / Answer
Answer
April
May
June
Quarter
Budgeted Unit Sales
80,000
90,000
120,000
290,000
Add: Desired Ending Inventory of finished goods
9,000
12,000
9,500
9,500
Total needs
89,000
102,000
129,500
299,500
Less: Beginning inventory of finished stock
8,000
9,000
12,000
8,000
Required Production in Units
81,000
93,000
117,500
291,500
----Working for above----
April
May
June
Quarter
Budgeted Unit Sales (1)
80000
90000
120000
Total of all 1
Add: Desired Ending Inventory of finished goods (2)
=90000*10%
=120000*10%
=95000*10%
9500
Total needs (3)
(1+2)
(1+2)
(1+2)
(1+2)
Less: Beginning inventory of finished stock (4)
8000
9000
12000
8000
Required Production in Units
(3 – 4)
(3 – 4)
(3 – 4)
(3 – 4)
April
May
June
Quarter
Budgeted Unit Sales
80,000
90,000
120,000
290,000
Add: Desired Ending Inventory of finished goods
9,000
12,000
9,500
9,500
Total needs
89,000
102,000
129,500
299,500
Less: Beginning inventory of finished stock
8,000
9,000
12,000
8,000
Required Production in Units
81,000
93,000
117,500
291,500
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