Question

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, 20Y1	1,040		1,690
Second quarter, 20Y1	2,860		1,820
Third quarter, 20Y1	7,280		6,890
Fourth quarter, 20Y1	5,980		5,070
First quarter, 20Y2	1,170		1,560

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 20Y1 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.

Answer 1

Solution:

Stillwater Designs
Production budget
For the Year Ended December 31, 20Y1
	1st Qtr.	2nd Qtr.	3rd Qtr.	4th Qtr.	Year
S12L7:
Sales Units	1040	2860	7280	5980	17160
Add: Ending inventory (20% of next sales)	572	1456	1196	234	234
Total Requirement	1612	4316	8476	6214	17394
Less: Beginning Inventory	340	572	1456	1196	340
Production units	1272	3744	7020	5018	17054
S12L5:
Sales Units	1690	1820	6890	5070	15470
Add: Ending inventory	546	2067	1521	468	468
Total Requirement	2236	3887	8411	5538	15938
Less: Beginning Inventory	170	546	2067	1521	170
Production units	2066	3341	6344	4017	15768