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 20% of the following month’s sales. The inventory at the end of March was 12,000 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:

Answer is complete but not entirely correct Down Under Products, Ltd., Production Budget April May June Quarter Budgeted units sales Add: Desired units of ending finished goods invento Total needs 60,000 16,000 76,000 12.000. 64,000 80,000 20,000 100,000 16,000 ? 84,000 100,000 17,000 117,000 20.000 o 97,000 240,000 53,000 293,000 48.000 245,000 >| Less: Units of beginning finished goods inventory Required production in units

Explanation / Answer

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.

April May June Quarter Budgeted unit sales 60000 80000 100000 240000 Add: Desired units of ending finished goods inventory 16000 20000 17000 17000 Total needs 76000 100000 117000 257000 Less: Units of beginning finished goods inventory (12000) (16000) (20000) (12000) Required production in units 64000 84000 97000 245000

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