Question

Preparing a Production Budget Patrick Inc. makes industrial solvents. In the first 4 months of the...

Preparing a Production Budget

Patrick Inc. makes industrial solvents. In the first 4 months of the coming year, Patrick expects the following unit sales:

January 41,000
February 38,000
March 50,000
April 51,000

Patrick's policy is to have 21% of next month's sales in ending inventory. On January 1, it is expected that there will be 4,350 drums of solvent on hand.

Required:

Prepare a production budget for the first quarter of the year. Show the number of drums that should be produced each month as well as for the quarter in total. If required, round your answers to the nearest whole unit.

Patrick Inc.
Production Budget
For the Coming Quarter
January February March 1st Quarter Total
Sales
Desired ending inventory
Total needs
Less: Beginning inventory
Units to be produced
Business   Accounting   
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Answer #1
Calculation of Production budget for the Quarter 1
January February March Total First Quarter
(Units) (Units) (Units) (Units)
Sales 41000 38000 50000 129000
Planned ending invetory(b) 7980 10500 10710
(21% 0f next months expecting unit Sales) (21% 38,000) (21% 50,000) (21% 51,000)
Total Production Required (a+b) 48980 48500 60710 158190
Less: Opening Inventory 4350 7980 10500
Units to Be Prodcued 44630 40520 50210 135360
Answer =
Units To be produced 44630 40520 50210 135360
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