Blue Wave Co. predicts the following unit sales for the coming four months: Sept
ID: 2514027 • Letter: B
Question
Blue Wave Co. predicts the following unit sales for the coming four months: September, 4,000 units, October, 5,000 units; November, 7,000 units, and December, 7,600 units. The company's policy is to maintain finished goods inventory equal to 60% of the next month's sales. At the end of August, the company had 2,400 finished units on hand. Prepare a production budget for each of the months of September, October, and November. Blue Wave Co Production Budget September, October and November September October November Next month's budgeted sales (units) 0 Units to be produced 0 0Explanation / Answer
Months
September
October
November
Next Month's sales (units)
5000
7000
7600
Percentage for ending inventory
60%
60%
60%
Ending inventory
3000
4200
4560
Add: Units expected to be sold
4000
5000
7000
Total requirements in units
7000
9200
11560
Less: beginning inventory
2400
3000
4200
Units to be produced
4600
6200
7360
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Months
September
October
November
Next Month's sales (units)
5000
7000
7600
Percentage for ending inventory
60%
60%
60%
Ending inventory
3000
4200
4560
Add: Units expected to be sold
4000
5000
7000
Total requirements in units
7000
9200
11560
Less: beginning inventory
2400
3000
4200
Units to be produced
4600
6200
7360
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