value 0.70 points Down Under Products, Ltd, of Australia has budgeted sales of i

Question

value 0.70 points Down Under Products, Ltd, of Australia has budgeted sales of its popular boormerang for the next four months as follows: 52,000 75,000 92,000 81,000 April June July 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 7,800 units. Required: 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., Production Budget April May June Quarter Budgeted units sales Total needs Required production in units

Explanation / Answer

Down under Products, Ltd. Production Budget April May June Quarter Budgeted units sales 52,000 75,000 92,000 219,000 Ending Inventory 75,000 x 15% = 11,250 92,000 x 15% = 13,800 81,000 x 15% = 12,150 12,150 Total needs 63,250 88,800 104,150 231,150 Beginning Inventory 7,800 11,250 13,800 7,800 Required production in units 55,450 77,550 90,350 223,350

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