EXERCISE 8-2 Production Budget LO8-3 Down Under Products, Ltd., of Australia has

Question

EXERCISE 8-2 Production Budget LO8-3 Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows April May June July Unit Sales 50,000 75,000 90,000 80,000 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 5,000 units. Required: Using Schedule 2 as your guide, prepare a production budget by month and in total, for the second quarter

Explanation / Answer

Particulars April May June July Sales 50,000 75,000 90000 80000 Add: Ending Inventory (10% of next month sale) 7500 9000 8000 Less: Opening Inventory 5000 7500 9000 8000 Budgeted Production 52,500 76,500 89,000

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