Question

A sales budget is given below for one of the products manufactured by the OMI Co.:
January	25,000 units
February	40,000 units
March	65,000 units
April	45,000 units
May	35,000 units
June	30,000 units
The inventory of finished goods at the end of each month must equal 20% of the next month's sales.
However, on December 31 the finished goods inventory totaled only 4,000 units.
Each unit of product requires three pounds of specialized material.
The requires an ending inventory at the end of each month equal to 30% of the next month's production needs.
This requirement had been met on January 1 of the current year.
Required:   Show your work!!
a. Prepare a budget showing the required production each month for January, February, March, and April.
b. Prepare a budget showing the quantity of switches to be purchased each month for January, February, and March.

Answer 1