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 Apri May June July Sales in Units 90,000 95,000 130,000 100,000 The company is now in the process of prepaning a production budget for the secand quarter. Past experience has shown that end-of-month inventory levels must equal 20% of the following month's sales. The inventory at the end of March was 18,000 unts 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

*20% of the following month's sales in units

April May June Quarter Budgeted units sales 90,000 95,000 130,000 315,000 Add: Desired units of ending finished goods inventory 19,000 26,000 20,000 20,000 Total needs 109,000 121,000 150,000 335,000 Less: Units of beginning finished goods inventory 18,000 19,000 26,000 18,000 Required production in units 91,000 102,000 124,000 317,000

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