Question

Production Budget

Assume that Stillwater Designs produces two automotive subwoofers: S12L7 and S12L5. The S12L7 sells for $475, and the S12L5 sells for $300. Projected sales (number of speakers) for the coming five quarters are as follows:

	S12L7		S12L5
First quarter, 20Y1	920		1,495
Second quarter, 20Y1	2,530		1,610
Third quarter, 20Y1	6,440		6,095
Fourth quarter, 20Y1	5,290		4,485
First quarter, 20Y2	1,035		1,380

The vice president of sales believes that the projected sales are realistic and can be achieved by the company.

Stillwater Designs needs a production budget for each product (representing the amount that must be outsourced to manufacturers located in Asia). Beginning inventory of S12L7 for the first quarter of 20Y1 was 340 boxes. The company's policy is to have 20% of the next quarter's sales of S12L7 in ending inventory. Beginning inventory of S12L5 was 170 boxes. The company's policy is to have 30% of the next quarter's sales of S12L5 in ending inventory.

Required:

Prepare a production budget for each quarter for 20Y1 and for the year in total.

Stillwater Designs
Production Budget for S12L7
For the Year Ended December 31, 20Y1
	1st Qtr.	2nd Qtr.	3rd Qtr.	4th Qtr.	Year
Sales
Desired ending inventory
Total needs
Less: Beginning inventory
Units produced

Prepare a production budget for each quarter for 20Y1 and for the year in total. If required, round your answers to nearest whole value.

Stillwater Designs
Production Budget for S12L5
For the Year Ended December 31, 20Y1
	1st Qtr.	2nd Qtr.	3rd Qtr.	4th Qtr.	Year
Sales
Desired ending inventory
Total needs
Less: Beginning inventory
Units produced

Answer 1

Solution

Stillwater Designs
Production Budget for S12L7
For the Year Ended December 31, 20Y1
	1st Qtr.	2nd Qtr.	3rd Qtr.	4th Qtr.	Year
Sales	920	2530	6440	5290	15180
Desired ending inventory	506	1288	1058	207	207
Total needs	1426	3818	7498	5497	15387
Less: Beginning inventory	340	506	1288	1058	340
Units produced	1086	3312	6210	4439	15047

.

Stillwater Designs
Production Budget for for S12L5
For the Year Ended December 31, 20Y1
	1st Qtr.	2nd Qtr.	3rd Qtr.	4th Qtr.	Year
Sales	1,495	1,610	6,095	4,485	13,685
Desired ending inventory	483	1,829	1,346	414	414
Total needs	1,978	3,439	7,441	4,899	14,099
Less: Beginning inventory	170	483	1,829	1,346	170
Units produced	1,808	2,956	5,612	3,554	13,929