Exercise 9-4 Turney Company produces and sells automobile batteries, the heavy-d

Question

Exercise 9-4

Turney Company produces and sells automobile batteries, the heavy-duty HD-240. The 2017 sales forecast is as follows.
Quarter HD-240 1 5,200 2 7,420 3 8,110 4 10,150
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.

Explanation / Answer

Production Budget

For the year 2017

Product HD-240

Quarter 1 Quarter 2 Quarter 3 Quarter 4 Yearly Opening Stock 2080 2968 3244 4060 Add: Production 6088 7696 8926 8690 Units available for sale 8168 10664 12170 12750 Less: Closing Stock 2968 (40% of next qter sale) 3244 4060 2600 Sales 5200 7420 8110 10150 30880

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