LO. 3 (Production budget) Katherine Company sales budget has thefollowing unit s

Question

LO. 3 (Production budget) Katherine Company sales budget has thefollowing unit sales projections for each quarter of calendar year2009:

January-March                           540,000

April-June                                  680,000

July-September                          490,000

October-December                   550,000

Total                                        2,260,000

Sales for the first quarter of 2010 are expected to be 600,000units. Ending inventory of finished goods for each quarter isschedule to equal 5 percent of the next quarter’s budgetedsales. The company is expected to be in compliance with this policyas of December 31, 2008. Develop a quarterly production budget for2009 and for the year in total.

Explanation / Answer

Q1 Q2 Q3 Q4 BudgetedSales 540,000 680,000 490,000 550,000 BeginningInventory 27,000 34,000 24,500 27,500 EndingInventory 34,000 24,500 27,500 30,000 BudgetedProduction 547,000 670,500 493,000 552,500

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