Production and Raw Materials Budget: Hai Dunna Wanna Go Ltd. manufactures hula hoops, whatever that is....

Production and Raw Materials Budget: Hai Dunna Wanna Go Ltd. manufactures hula hoops, whatever that is. They need a special type of plastic, often hard to get, for the hoops. This year they plan to order the plastic ahead of time so they will cover three months of production without running out, just in case more ordering problems come up. Following is the information that should be useful to predict how much plastic they would need for July and August (only):

Production of Hula Hoops: They want to keep at least 25% of the next month’s sales to make sure they have sufficient quantities, given that sales of this highly sought after product is not so predictable. The June 30^th finished hoop inventory was 30,000 hoops.
Sales are budgeted as follows:
1. July 50,000 hoops
2. August 80,000 hoops
3. September 40,000 hoops

Required: Prepare a production budget for July and August.

Expert Solution

	July	August	September
Forecasted unit sales	50,000	80,000	40,000
+ Planned ending inv. units	20,000	10,000
Total production required	70,000	90,000
- Beginning F/G inventory	30,000	20,000
Units to be manufactured	40,000	70,000


Working
	July	August
Planned ending inv. units	(80,000 x 25%)	(40,000 x 25%)

ekkarill92 answered 1 year ago

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