Question

The Big Chocolate Company is preparing its master budget for the 3^rd quarter ending September 30. The following sales units were forecasted for this 3^rd quarter. In addition to the budgets sales in units for these months, the forecasted sales in units for October were 45,000 units. Each unit is expected to sell for $44 per unit.

	July	August	September
Sales in units	31,000	34,000	41,000

a. Prepare the sales budget for July, August, and September.

	July	August	September
Forecasted sales in units
Selling price in units
Budgeted sales revenue

The Big Chocolate Company is preparing its master budget for the 3^rd quarter ending September 30. The following sales units were forecasted for this 3^rd quarter. In addition to the budgets sales in units for these months, the forecasted sales in units for October were 45,000 units.

	July	August	September
Sales in units	31,000	34,000	41,000

The company wants to end each month with ending finished goods inventory equal to 30% of next month’s forecasted sales in units. Ending inventory from June is 13,400 units.

Prepare the production budget for July, August, and September.

	July	August	September
Budgeted sales in units
Add: Desired ending inventory
Required units
Less: Ending inventory from prior period
Units to produce

Answer 1

1.

	July	August	September
Forcasted sales in units	31,000	34,000	41,000
Selling price in units	$                                          44	$                                          44	$                                          44
Budgeted sales revenue	31,000 * $44 = $1,364,000	34,000 * $44 = $1,496,000	41,000 * $44 = $1,804,000

2.

	July	August	September
Budgeted sales in units	31,000	34,000	41,000
Add: Desired ending inventory	34,000 * 30% = 10,200	41,000 * 30% = 12,300	45,000 * 30% = 13,500
Required units	41,200	46,300	54,500
Less: Ending inventory from prior period	13,400	34,000 * 30% = 10,200	41,000 * 30% = 12,300
Units to produce	27,800	36,100	42,200