own Under Products, Ltd, of Australia has budgeted sales of its popular boomeran
ID: 2405245 • Letter: O
Question
own Under Products, Ltd, of Australia has budgeted sales of its popular boomerang for the next four months as follows April May June July 4,000 85,0e0 114,000 92,000 The company is now in the pro of preparing a production budget for the second quarter. Past experience has shown that end-of rmonth inventory levels must equal 10% of the following month's unit sales. The inventory at the end of March was 7,400 units. Required: Prepare a production budget by month and in total, for the second quarter Down Under Products, Ltd., Production Budget April May June Budgeted units sales Total needs Required production in unitsExplanation / Answer
Solution:
Desired units of ending finished goods inventory = 10% of following month sales
April units = 85000 x 10% = 8500
May units = 114000 x 10% = 11400
June units = 92000 x 10% = 9200
Down Under Products Ltd. Production budget April May June Quarter Budgeted unit sales 74000 85000 114000 273000 Add: Desired units of ending finished goods in inventory 8500 11400 9200 9200 Total needs 82500 96400 123200 282200 Less: Units of beginning finished goods inventory 7400 8500 11400 7400 Required production in units 75100 87900 111800 274800Related Questions
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