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 Sales in Units 72,000 85,000 112,000 91,000 April May July The company is now n the process of preparing a production budget or the second quarter Past expenence has shown that end-of-month inventory leveis must equal 2 )% o the ollow ng month s sales. The inventory at the end of March was 14 0 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. n Under Products, L oduction B June Quarter unit salers needs uired production in units

Explanation / Answer

April May June Quarter Budgeted Unit Sales 72000 85000 112000 269000 Total Needs Less Opening Inventory 14400 17000 22400 53800 Add Closing Inventory (20% of following month sales) 17000 22400 18200 57600 Required Production in Units 74600 90400 107800 272800

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