Question

Production Budget

Assume that Stillwater Designs produces two automotive subwoofers: S12L7 and S12L5. The S12L7 sells for $475, and the S12L5 sells for $300. Projected sales (number of speakers) for the coming five quarters are as follows:

	S12L7		S12L5
First quarter, 20X1	880		1,430
Second quarter, 20X1	2,420		1,540
Third quarter, 20X1	6,160		5,830
Fourth quarter, 20X1	5,060		4,290
First quarter, 20X2	990		1,320

The vice president of sales believes that the projected sales are realistic and can be achieved by the company.

Stillwater Designs needs a production budget for each product (representing the amount that must be outsourced to manufacturers located in Asia). Beginning inventory of S12L7 for the first quarter of 20X1 was 340 boxes. The company's policy is to have 20% of the next quarter's sales of S12L7 in ending inventory. Beginning inventory of S12L5 was 170 boxes. The company's policy is to have 30% of the next quarter's sales of S12L5 in ending inventory.

A production budget for each quarter for 20X1 and for the year in total.

Production Budget for S12L7

Sales	1st Qtr	2nd Qtr	3rd Qtr	4th Qtr	Year Total
Desired Ending Inventory
Total Needs
Less: Beginning inventory
Units produced

Production Budget for S12L5

Sales	1st Qtr	2nd Qtr	3rd Qtr	4th Qtr	Year Total
Desired Ending Inventory
Total Needs
Less: Beginning inventory
Units produced

Answer 1

PRODUCTION BUDGET FOR S12L7

S12L7	Q1	q2	q3	q4	q5
Sales	880	2420	6160	5060	990
Desired ending inventory	484	1232	1012	198	340
Total needs	1364	3652	7172	5258	1330
Less begining inventory	340	484	1232	1012	198
Units produced	1024	3168	5940	4246	1132

PRODUCTION BUDGET FOR S12L5

	Q1	q2	q3	q4	q5
Sales	1430	1540	5830	4290	1320
Desired ending inventory	462	1749	1287	396	170
Total needs	1892	3289	7117	4686	1490
Less begining inventory	170	462	1749	1287	396
Units produced	1722	2827	5368	3399	1094

Notes

1) The opening inventory for 1qtr is ending inventory for last quarter

The ending inventory for 1qtr is opening inventory for 2 qtr