Question

Production Budget

Aqua-pro Inc. produces submersible water pumps for ponds and cisterns. The unit sales for selected months of the year are as follows:

	Unit Sales
April	189,000
May	231,000
June	210,000
July	252,000

Company policy requires that ending inventories for each month be 25% of next month's sales. However, at the beginning of April, due to greater sales in March than anticipated, the beginning inventory of water pumps is only 21,000.

Required:

Prepare a production budget for the second quarter of the year. Show the number of units that should be produced each month as well as for the quarter in total.

Aqua-pro Inc.
Production Budget
For the Second Quarter
	April	May	June	Total
Sales
Desired ending inventory
Total needs
Less: Beginning inventory
Units produced

Answer 1

Aqua-Pro Inc
Production Budget
For the Second Quarter
	April	May	June	Total
Sales	$                         1,89,000	$             2,31,000	$          2,10,000	$                   6,30,000
Add:Desired Ending Inventory	$                            57,750	$                52,500	$             63,000	$                   1,73,250
Total Inventory required	$                         2,46,750	$             2,83,500	$          2,73,000	$                   8,03,250
Less:Beginning Inventory	$                          -21,000	$               -57,750	$           -52,500	$                  -1,31,250
Purchases	$                         2,25,750	$             2,25,750	$          2,20,500	$                   6,72,000