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

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 15% of the following month’s sales. The inventory at the end of March was 13,200 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.

Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows:

Explanation / Answer

April May June Quarter Budget Sales in units 88000 90000 128000 306000 Add desired ending inventory 13500 19200 14850 14850 Total Needs 101500 109200 142850 320850 Less Beginning Inventory 13200 13500 19200 13200 Required Production 88300 95700 123650 307650

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