Question

Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next...

Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows:

Sales in Units
April 72,000
May 85,000
June 112,000
July 91,000

The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month inventory levels must equal 20% of the following month’s sales. The inventory at the end of March was 14,400 units.

Required:

Prepare a production budget for the second quarter; in your budget, show the number of units to be produced each month and for the quarter in total.

Down Under Products, Ltd.,
Production Budget
April May June Quarter
Budgeted unit sales
ADD or Less
Total needs 0 0 0 0
ADD or Less
Required production in units 0 0 0 0
Business   Accounting   
0 0
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Homework Answers

Answer #1

Down Under Products, Ltd.,

Production Budget

April

May

June

Quarter

Budgeted unit sales

72000

85000

112000

269000

Add: Desired Closing Inventory

17000

22400

18200

18200

Total needs

89000

107400

130200

287200

Less: Beginning Inventory

14400

17000

22400

14400

Required production in units

74600

90400

107800

272800

June's Closing Inventory

July sales

91000 units

June's Closing Inventory (20% of 91000)

   18200
0 0
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