Problem 4 Galvin Production is beginning the budgeting process for 2003. The sal

Question

Problem 4 Galvin Production is beginning the budgeting process for 2003. The sales forecast for the first three months of 2003 in units is:

January   

10,000

February   

12,000

March   

13,000

The company desires to have 10% of the next month’s anticipated sales in inventory at the end of a month. December’s ending inventory reflects this policy. April’s sales are budgeted at 15,000 units. Prepare a production budget for January, February, and March, 2003.

January   

10,000

February   

12,000

March   

13,000

Explanation / Answer

Production Budget Jan Feb March April Expected unit sales 10000 12000 13000 15000 Add Desired ending finished goods Inventory (Next Month Sale*10%) 1200 1300 1500 Total production Required 11200 13300 14500 Less Beginning finished goods inventory 1000 1200 1300 No of Unit to be Produced 10200 12100 13200

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