Question

Aron Company makes computer screens, Model 1 and Model 2. Aron anticipates selling the screens as follows:

	Unit of	Units of
	Model 1	Model 2
Quarter ending 3/31	5,000	6,000
Quarter ending 6/30	4,500	5,500
Quarter ending 9/30	5,500	6,500
Quarter ending 12/31	6,000	7,000

The inventory on 1/1/18 is 2500 units of Model 1 and 3000 units of Model 2. Aron wants to have on hand 45% of the anticipated sales of the following month for each model. Prepare a production budget for the first 3 quarters of 2018 for both models.

Answer 1

--Production Budgets

Production Budget for Model 1
	Q1	Q2	Q3	Total
Budgeted units to be sold	5,000	4,500	5,500	15,000
Add: Desired ending inventory	2,025	2,475	2,700	2,700
Total units needed	7,025	6,975	8,200	17,700
Less: Beginning units available	2,500	2,025	2,475	2,500
Units to be produced	4,525	4,950	5,725	15,200
Production Budget for Model 2
	Q1	Q2	Q3	Total
Budgeted units to be sold	6,000	5,500	6,500	18,000
Add: Desired ending inventory	2,475	2,925	3,150	3,150
Total units needed	8,475	8,425	9,650	21,150
Less: Beginning units available	3,000	2,475	2,925	3,000
Units to be produced	5,475	5,950	6,725	18,150