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: April May June July 54,000 75,000 94,000 82,000 The company is now in the process of preparing a production budget for the second quarter. Past expenence 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 10,800 units. Required: 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. Production Budget April May June Quarter Budgeted units sales Total needs Required production in units References eBook& Resources -Hints- -

Explanation / Answer

Down Under Products Ltd Production Budget April May June Quarter Budgeted Units Sales 54000 75000 94000 223000 Add: Ending Inventory (20% of next month sales) 15000 18800 16400 16400 Total needs 69000 93800 110400 239400 Less: Beginning Inventory 10800 15000 18800 10800 Required production units 58200 78800 91600 228600

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