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 June July Sales in Units 90,000 95,000 130,000 100,000 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 20% of the followi The inventory at the end of March was 18,000 units. ng month's sales. 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

Production budget

April May June Quarter Budgeted unit sales 90000 95000 130000 315000 Add: Desired ending inventory 19000 26000 20000 20000 Total needs 109000 121000 150000 335000 Less; Beginning inventory (18000) (19000) (26000) (18000) Required production in units 91000 102000 124000 317000

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