Question
In: Accounting
Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next...
|
Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows: |
| Sales in Units | |||
| April | 64,000 | ||
| May | 80,000 | ||
| June | 104,000 | ||
| July | 87,000 | ||
|
The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month inventory levels must equal 15% of the following month’s sales. The inventory at the end of March was 9,600 units. |
| Required: |
|
Prepare a production budget for the second quarter; in your budget, show the number of units to be produced each month and for the quarter in total. |
Solutions
Expert Solution
| Down Under Products Ltd. | ||||
| Production Budget | ||||
| For 2nd Quarter | ||||
| April | May | June | Quarter | |
| Budgeted sales | 64,000 | 80,000 | 104,000 | 248,000 |
| Add: Desired Ending Inventory | 80,000*15% = 12,000 | 104,000*15% = 15,600 | 87,000*15% = 13,050 | 87,000*15% = 13,050 |
| Total Needs | 76,000 | 95,600 | 117,050 | 261,050 |
| Less: Beginning inventory | 9,600 | 80,000*15% = 12,000 | 104,000*15% = 15,600 | 9,600 |
| Required production | 66,400 | 83,600 | 101,450 | 251,450 |
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ekkarill92 answered 2 years agoRelated Solutions
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month’s unit sales. The inventory at the end of March was 15,600
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June
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Sales in Units
April
78,000
May
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June
118,000
July
94,000
The company is now in the process of preparing a production
budget for the second quarter. Past experience has shown that
end-of-month inventory levels must equal 20% of the following
month’s sales. The inventory at the end of March was 15,600
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Required:
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