2 Crystal Telecom has budgeted the sales of its innovative mobile phone over the
ID: 2454940 • Letter: 2
Question
2
Crystal Telecom has budgeted the sales of its innovative mobile phone over the next four months as follows:
Sales in Units
July
24,000
August
41,000
September
63,000
October
54,000
The company is now in the process of preparing a production budget for the third quarter. Past experience has shown that end-of-month finished goods inventories must equal 10% of the next month’s sales. The inventory at the end of June was 2,400 units.
Required:
Prepare a production budget for the third quarter showing the number of units to be produced each month and for the quarter in total. (Do not round intermediate calculations.)
Crystal Telecom
Production Budget
July
August
September
Quater
Budgeted sales in units
Add: Ending inventory
Total needs
Deduct: Beginning inventory
Required production in units
Explanation:
Desired ending inventory is 10% of the following month's sales in units.
Crystal Telecom has budgeted the sales of its innovative mobile phone over the next four months as follows:
Explanation / Answer
Production Budget for the third Quater showing monthwise and Quaterwise.
July August September Quatar
Budgeted slaes in Units 24000 41000 63000 128,000
Add: Ending inventory 4100 6300 5400 15,800
Total needs 28,100 47,300 68,400 143,800
Deduct: Beginning Inventory (2,400) (4,100) (6,300) (12,800)
Required production in Units 25,700 43,200 62,100 131,000
Note: Beginning Inventoryis closing inventory of previous months.
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