Exercise 23-4 Turney Company produces and sells automobile batteries, the heavy-
ID: 2408956 • Letter: E
Question
Exercise 23-4 Turney Company produces and sells automobile batteries, the heavy-duty HD-240. The 2017 sales forecast is as follows. Quarter HD-240 5,000 7,000 8,000 10,000 4 The January 1, 2017, inventory of HD-240 is 2,000 units. Management desires an ending inventory each quarter equal to 40% of the next quarter's sales. Sales in the first quarter of 2018 are expected to be 25% higher than sales in the same quarter in 2017 Prepare quarterly production budgets for each quarter and in total for 2017.Explanation / Answer
Answer
Working
Q1
Q2
Q3
Q4
Year
[given]
Budgeted Sales Units
5000
7000
8000
10000
30000
[Equals to 40% of following quarter’s sale]
Add: Desired Ending Inventory of finished goods
2800
3200
4000
2500
2500
Total needs
7800
10200
12000
12500
32500
[Equals to ending inventory of last quarter]
Less: Beginning inventory of finished stock
2000
2800
3200
4000
2000
Budgeted production in Units
5800
7400
8800
8500
30500
Q1
Q2
Q3
Q4
Year
Budgeted Sales Units
5000
7000
8000
10000
TOTAL
Desired Ending Inventory of finished goods
=7000*40%
=8000*40%
=10000*40%
= 6250 x 40%
2500 [6250 x 40% = 2500]
Total needs
TOTAL
TOTAL
TOTAL
TOTAL
TOTAL
Beginning inventory of finished stock
2000 [given]
2800
3200
4000
2000
Budgeted production in Units
Working
Q1
Q2
Q3
Q4
Year
[given]
Budgeted Sales Units
5000
7000
8000
10000
30000
[Equals to 40% of following quarter’s sale]
Add: Desired Ending Inventory of finished goods
2800
3200
4000
2500
2500
Total needs
7800
10200
12000
12500
32500
[Equals to ending inventory of last quarter]
Less: Beginning inventory of finished stock
2000
2800
3200
4000
2000
Budgeted production in Units
5800
7400
8800
8500
30500
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