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QS 20-16 Manufacturing: Production budget LO P1 Atlantic Surf manufactures surfboards. The company’s sales budget for...

QS 20-16 Manufacturing: Production budget LO P1

Atlantic Surf manufactures surfboards. The company’s sales budget for the next three months is shown below. In addition, company policy is to maintain finished goods inventory equal (in units) to 50% of the next month’s unit sales. As of June 30, the company has 1,550 finished surfboards in inventory, which complies with the policy.

July August September
Sales (in units) 3,100 7,300 3,600


Prepare a production budget for the months of July and August.

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Production budget
Particulars July August
Budgeted Ending inventories
July (7300*0.50)       3,650
August (3600*0.50)         1,800
Total units (a)       3,650         1,800
Required units of available production (b)       3,100         7,300
Beginning units ©       1,550         3,650
Units to be produced (a+b-c)       8,300       12,750
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