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 ril May June July Sales in Units 74,000 85,000 114,000 92,000 The company 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 is now in the process of preparing a production budget for the second quarter. Past 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

Explanation / Answer

Down Under Products Ltd Production Budget April May June Quarter Budgeted unit sales                              74,000                                   85,000                                 114,000                            273,000 Add: Desired ending finished goods unit 85,000*10% = 8,500 114,000*10% = 11,400 92,000*10% = 9,200 92,000*10% = 9,200 Total Required units                              82,500                                   96,400                                 123,200                            282,200 Less: Beginning finished goods unit                                7,400 85,000*10% = 8,500 114,000*10% = 11,400                                7,400 Required production unit                              75,100                                   87,900                                 111,800                            274,800

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