Champ, Inc., predicts the following sales in units for the coming two months: Ma

Question

Champ, Inc., predicts the following sales in units for the coming two months: May June 190 220 Sales in units Each month's ending inventory of finished units should be 60% of the next month's sales. The April 30 finished goods inventory is 114 units. Compute Champ's budgeted production (in units) for May. CHAMP, INC Production Budget For Month Ended May 31 Next month's budgeted sales (units) Ratio of inventory to future sales Budgeted ending inventory (units) Add: budgeted sales for the month (units) Required units of available production Less: Beginning inventory (units) Units to be produced

Explanation / Answer

Production budget :

Next month's budgeted sales 220 Ratio of inventory to future sales 60% Budgeted ending inventory (units) 132 Add: Budgeted sales for the month 190 Required units of available for production 322 Less; Beginning inventory -114 Unit to be produced 208

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