Based on the following production and sales estimates for May, prepare the sales

Question

Based on the following production and sales estimates for May, prepare the sales and production budgets:

Estimated beginning inventory (units), May 1

18,000

Desired ending inventory (units), May 31

21,600

Expected sales volume (units):

    Area W

6,000

    Area X

7,000

    Area Y

8,000

Unit sales price

   $20

Estimated beginning inventory (units), May 1

18,000

Desired ending inventory (units), May 31

21,600

Expected sales volume (units):

    Area W

6,000

    Area X

7,000

    Area Y

8,000

Unit sales price

   $20

Explanation / Answer

a. Sales Budget May Sales in units               21,000 Unit Sales price $ 20 Sales Value $       4,20,000 Working: Area W                 6,000 Area X                 7,000 Area Y                 8,000 Total Unit sales               21,000 b. Production Budget May Sales Units               21,000 Add:Ending Inventory               21,600 Less:Beginning Inventory               18,000 Production               24,600

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