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

Question

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 7,400 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

Production Budget

for the second quarter

Production Budget

for the second quarter

April May JUne Total unit sales 74000 85000 114000 27300 Desired ending inventory 8500   [85000*.10] 11400 [11400*.10] 9200   [92000*.10] 29100 less beginning inventory (7400) (8500) (11400) (27300) Units to be produced 75100 87900 111800 274800

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