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Patrick Inc. makes industrial solvents. In the first 4 months of the coming year, Patrick expects...

Patrick Inc. makes industrial solvents. In the first 4 months of the coming year, Patrick expects the following unit sales:

January 41,000
February 38,000
March 50,000
April 51,000

Patrick's policy is to have 23% of next month's sales in ending inventory. On January 1, it is expected that there will be 4,500 drums of solvent on hand.

Required:

Prepare a production budget for the first quarter of the year. Show the number of drums that should be produced each month as well as for the quarter in total. If required, round your answers to the nearest whole unit.

Patrick Inc.
Production Budget
For the Coming Quarter
January February March 1st Quarter Total
Sales
Desired ending inventory
Total needs
Less: Beginning inventory
Units to be produced

Solutions

Expert Solution

January February March 1st Quarter Total
Sales                      (a) $41,000 $38,000 $50,000 $129,000
Ending Inventory $8,740 $11,500 $11,730 $31,970
(38000*23%) (50000*23%) (51000*23%)
Patrick Inc
Production Budget
For the coming Quarter
January February March 1st Quarter Total
Sales                      (a) $41,000 $38,000 $50,000 $129,000
Desired Ending Inventory (b) $8,740 $11,500 $11,730 $31,970
Total Needs © = (a+b) $49,740 $49,500 $61,730 $160,970
Less: Beginning Inventory (d) $4,500 $8,740 $11,500 $24,740
Units to be produced ( c) - (d) $45,240 $40,760 $50,230 $136,230

ekkarill92 answered 8 months ago
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