QS 22-12 Manufacturing: Production budget LO P1 Champ, Inc., predicts the follow

Question

QS 22-12 Manufacturing: Production budget LO P1 Champ, Inc., predicts the following sales in units for the coming two months: May June 270 230 Sales in units Each month's ending inventory of finished units should be 70% of the next month's sales The April 30 finished goods inventory is 189 units. Compute Champ's budgeted production (in units) for May. CHAMP, INC Production Budget For Month Ended May 31 Budgeted ending inventory (units) Ratio of inventory to future sales Budgeted ending inventory (units) Next month's budgeted sales (units) Required units of available production Less: Beginning inventory (units) Units to be produced

Explanation / Answer

Next month’s budgeted sales (units) 230 Ratio of inventory to future sales 70% Budgeted ending inventory (units) 161 Add: budgeted sales for the month (units) 270 Required units of available production 431 Less: Beginning inventory (units) 189 Units to be produced 242

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