Down Under Products, Ltd., of Australia has budgeted sales of its popular boomer
ID: 2446017 • Letter: D
Question
Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows:
Sales in Units
April 58,000
May 75,000
June 98,000
July 84,000
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 15% of the following month’s sales. The inventory at the end of March was 8,700 units.
Required:
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.
Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows:
Sales in Units
April 58,000
May 75,000
June 98,000
July 84,000
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 15% of the following month’s sales. The inventory at the end of March was 8,700 units.
Required:
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.
April May June Quarter Budgeted unit sales total needs required production in unitsExplanation / Answer
production budget (in Units)
particulars April May June quarter
Budgeted units sale 58000 75000 98000 231000
Add: closing inventory 11250 14700 12600 38550
Total required 69250 89700 110600 269550
Less: opening Inventory 8700 11250 14700 34650
required production in units 60550 78450 95900 234900
Notes: closing inventory calculation as follow:
April = 15% of 75000 = 11250
may = 15 % of 98000 = 14700
June = 15% of 84000 = 12600
38550
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