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: April May une July Unit Sales 56,000 75,000 96,000 83,000 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 unit sales. The inventory at the end of March was 5,600 units Required Prepare a production budget by month and in total, for the second quarter 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

*10% of the following month's sales in units

April May June Quarter Budgeted units sales 56,000 75,000 96,000 227,000 Add: Desired units of ending finished goods inventory* 7,500 9,600 8,300 8,300 Total needs 63,500 84,600 104,300 235,300 Less: Units of beginning finished goods inventory 5,600 7,500 9,600 5,600 Required production in units 57,900 77,100 94,700 229,700

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