Question

Boston Pharmaceutical manufactures metal stents for heart patients and has budgeted sales (in units) for 2019 as

follows:

January: 50,000 February: 40,000 March 60,000

April: 50,000 May: 40,000 June: 60,000

July: 50,000 August: 40,000 Sept: 60,000

October: 50,000 Nov.: 40,000 Dec. 60,000

The company is in the process of preparing a production budget for 2019. Boston plans to maintain ending inventory

levels equal to 10% of the following month's sales. The ending inventory at the end of 2018 was 5,000 stents and

75,000 stents are expected to be sold in January 2020.

Required: (Print all three budgets on the same page)

(a) Prepare a production budget for 2019. In your production budget you should show the number of stents to be

manufactured each month and for the year in total.

(Print all budgets in landscape)

(b)Refer to the original data. Prepare another production budget for 2019 assuming that budgeted sales will

increase 5% per month and 72,000 stents are expected to be sold in January 2020.

(c)Refer to the original data. Prepare another production budget for 2019 assuming that budgeted sales will

decrease by 15% a month and 60,000 stents are expected to be sold in January 2020.

Answer 1

Req a:
Month	Budgetd Sale	Add: End Inv	Less: Beg inv	Budgeted production
jan	50000	4000	5000	49000
Feb	40000	6000	4000	42000
mar	60000	5000	6000	59000
April	50000	4000	5000	49000
may	40000	6000	4000	42000
June	60000	5000	6000	59000
July	50000	4000	5000	49000
Aug	40000	6000	4000	42000
Sep	60000	5000	6000	59000
Oct	50000	4000	5000	49000
Nov	40000	6000	4000	42000
Dec	60000	7500	6000	61500
Jan 020	75000
Req b:
Month	Budgetd Sale	Add: End Inv	Less: Beg inv	Budgeted production
jan	52500	4200	5000	51700
Feb	42000	6300	4200	44100
mar	63000	5250	6300	61950
April	52500	4200	5250	51450
may	42000	6300	4200	44100
June	63000	5250	6300	61950
July	52500	4200	5250	51450
Aug	42000	6300	4200	44100
Sep	63000	5250	6300	61950
Oct	52500	4200	5250	51450
Nov	42000	6300	4200	44100
Dec	63000	7200	6300	63900
Jan 020	72000
Req c:
Month	Budgetd Sale	Add: End Inv	Less: Beg inv	Budgeted production
jan	42500	3400	5000	40900
Feb	34000	5100	3400	35700
mar	51000	4250	5100	50150
April	42500	3400	4250	41650
may	34000	5100	3400	35700
June	51000	4250	5100	50150
July	42500	3400	4250	41650
Aug	34000	5100	3400	35700
Sep	51000	4250	5100	50150
Oct	42500	3400	4250	41650
Nov	34000	5100	3400	35700
Dec	51000	6000	5100	51900
Jan 020	60000