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Denver Yards Manufacturing expects to sell the following number of trimmers each month for $150 each:...

Denver Yards Manufacturing expects to sell the following number of trimmers each month for $150 each: July 1,750 Trimmers August 1,500 Trimmers September 750 Trimmers October 500 Trimmers On June 30, Denver Yards Manufacturing had 100 bush trimmers in inventory. The company has a policy that the ending inventory in any month must be 16% of the following month's expected sales. Required: Prepare a sales budget for July till September. Prepare a production budget for July till September, with a column for each month

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Answer #1

Answer :

Production budget :

Particulars July August September
Budgeted sales units 1,750 1,500 750
Add : Ending units 240 120 80
Total production required 1,990 1,620 830
Less : Beginning units 100 240 120
Units to be produced 1,890 1,380 710

Notes :

a. Ending units :

July = 16% x 1,500 units = 240

August = 16% x 750 units = 120

September = 16% x 500 units = 80

b. Beginning units = Ending units of previous month

Sales Budget

Particulars July August September
Budgeted sales units (a) 1,750 1,500 750
Budgeted Selling price (b) $150 $150 $150
Budgeted sales (a x b) $262,500 $225,000 $112,500
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