Kyoto, Inc. predicts the following sales in units for the coming four months: ap

Question

Kyoto, Inc. predicts the following sales in units for the coming four months:

aprial may june july

240 280 300 240

Although each month's ending inventory of finished units should be 60% of the next month's sales, the March 31 finished goods inventory is only 100 units. A finished unit requires five pounds of raw material B. The March 31 raw materials inventory has 200 pounds of B. Each month's ending inventory of raw materials should be 30% of the following month's production needs.

Kyoto's budgeted production for the second quarter is:

Explanation / Answer

Hi,

Please find the answer as follows:

Budgeted Production for April = 240 + .60*280 - 100 = 308

Budgeted Production for May = 280 + 300*.6 - 280*.6 = 292

Budgeted Production for June = 300 + 240*.6 - 300*.6 = 264

Total Budgeted Production = 308 + 292 + 264 = 864

Thanks.

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