Turney Company produces and sells automobile batteries, the heavy-duty HD-240. T

Question

Turney Company produces and sells automobile batteries, the heavy-duty HD-240. The 2014 sales forecast is as follows.

Quarter

HD-240

The January 1, 2014, inventory of HD-240 is 2,080 units. Management desires an ending inventory each quarter equal to 40% of the next quarter’s sales. Sales in the first quarter of 2015 are expected to be 25% higher than sales in the same quarter in 2014.

Prepare quarterly production budgets for each quarter and in total for 2014.

Quarter

HD-240

1 5,200 2 7,290 3 8,200 4 10,300

Explanation / Answer

Production budget

sales in 2015 first quarter $5,200 @125% = $6500

Ending inventory given 40% of next months sale

1 quarter 2 qaurter 3rd quater 4th quarter total sale unit 5,200 7290 8200 10,300 30,990 Add:ending inventory 2916 3280 4120 2600 12,916 total needs 8116 10570 12320 12900 43906 less:beginning 2080 2916 3280 4120 12396 purchase required 6036 7654 9040 8780 31510

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