Down Under Products. Ltd., of Australia has budgeted sales of its popular boomer

ID: 2477688 • Letter: D

Question

Down Under Products. Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows: The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month inventory levels must equal 10% of the following month's sales. The inventory at the end of March was 6.200 units. Prepare a production budget for the second quarter; in your budget, show the number of units to be produced each month and for the quarter in total.

Explanation / Answer

Down Under Products Ltd

Production Budget

Particulars

Apr

May

Jun

Jul

Budgeted unit sales

62,000

80,000

102,000

86,000

Add: Ending Production Balance

8,000

10,200

8,600

Total Needs

70,000

90,200

110,600

86,000

Less: Beginning Production Balance

(6,200)

(8,000)

(10,200)

(8,600)

Required Production in Units

63,800

82,200

100,400

77,400