Company X Marketing Department has forecasted the following for next quarter: Pr

Question

Company X Marketing Department has forecasted the following for next quarter:

Product XX is expected to sell 14,600 units, Product XY is expected to sell 21,300 units, and Product XZ is expected to sell 34,400 units.

Beginning inventories are as follows:

XX.............1460

XY.............2130

XZ.............3444

Desired ending inventories are:

XX...........15% of sales

XY...........10% of sales

XZ...........20% of sales

Required: Prepare a Production Budget for Company X for the quarter ending August 31, 2010.

Explanation / Answer

Opening Stock + Production - Sales = Closing Stock

Production Budget for Company X for the quarter ending August 31, 2010:

Closing Stock + Sales - Opening Stock = Production

Product XX 15%*14600 + 14600 - 1460 = 15330

Product XY 10%*21300 + 21300 - 2130 = 21300

Product XZ 20%*34400 + 34400 - 3444 = 37836

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