Question 2 - Production Budget Down Under Products, Ltd., of Australia has budge
ID: 2581226 • Letter: Q
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Question 2 - Production Budget Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows: Sales in Units Apri 50,000 May 75,000 June 90,000 July 80,000 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 must equal 10% of the following months sales. The inventory at the end of March was 5,000 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.Explanation / Answer
Down Under Products Ltd, Australia
Production Budget for 2nd Quarter
April
May
June
Quarter
Budgeted sales in unit
50,000
75,000
90,000
215,000
Add : desired ending inventory
7500
9000
8,000
8,000
Total requirement
57,500
84,000
98,000
223,000
Less : Beginning Inventory
5,000
7,500
9,000
5,000
Required production
52,500
76,500
89,000
218,000
Down Under Products Ltd, Australia
Production Budget for 2nd Quarter
April
May
June
Quarter
Budgeted sales in unit
50,000
75,000
90,000
215,000
Add : desired ending inventory
7500
9000
8,000
8,000
Total requirement
57,500
84,000
98,000
223,000
Less : Beginning Inventory
5,000
7,500
9,000
5,000
Required production
52,500
76,500
89,000
218,000
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