13. Down Under Products, Ltd., of Australia has budgeted sales of its popular bo

Question

13.

Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows:

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 10% of the following month’s sales. The inventory at the end of March was 8,600 units.

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:

Explanation / Answer

The production budget is shown in below table:

Particulars April May June Total Sale 86,000 90,000 126,000 302,000 Add: Closing Stock(10% of next months sale) 9,000 12,600 9,800 31,400 Less: opening stock -8,600 -9,000 -12,600 -30,200 Production 86,400 93,600 123,200 303,200

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