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	216,000
May	264,000
June	240,000
July	288,000

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	Quarter
Budgeted Unit Sales	216000	264000	240000	720000
Add:Ending Inventory=(264000*25%) in April,(240000*25% in May),(288000*25%) in June	66000	60000	72000	72000
Total Needs	282000	324000	312000	792000
Less: Opening Inventory=21000 in April,Closing Stock of April is he beginning stock of may and closing stock of may is the beginning stock of June	21000	66000	60000	21000
Units Produced	261000	258000	252000	771000