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: 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 5.600 units. Prepare a production budget for the second quarter: in your budget, show the number of units to be produced each month and for the quarter in total.

Explanation / Answer

Production Budget April May    June    July Budgeted Sales Units 56000 75000 96000 83000 Add: Planned Closing inventory 7500 9600 8300 Less: Beginning inventory 5600 7500 9600 Planned Production in units 57900 77100 94700

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