Turney Company produces and sells automobile batteries, the heavy-duty HD-240. T

Question

Turney Company produces and sells automobile batteries, the heavy-duty HD-240. The 2017 sales forecast is as follows.

Quarter

HD-240

The January 1, 2017, inventory of HD-240 is 2,080 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.

Product HD-240

1

2

3

4

Year

Quarter

HD-240

Explanation / Answer

TURNEY COMPANY Quarterly Production budget for 2017 -Product HD-240 2017 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Total Budgeted Sales Units 5200 7110 8190 10240 30740 + Desired Ending Units 2844 3276 4096 2600 12816 Beginning Units -2080 -2844 -3276 -4096 -12296 Planned Production in Units 5964 7542 9010 8744 31260 Sales in the first quarter of 2018 = 1st Qtr of 2017 *125%      = 5200*125%      = 6500 Desired Ending Inventory = 40% x Next Qtr sales For Qtr 4 = 40% *6500 = 2600

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