Question

MEL Company manufactures and sells cricket bats for school teams. MEL's best-selling lines are the practice bats line and the match bats line. In the first four months of next year, MEL company expects to sell the following:

	Practice Bats		Match Bats
	Units	Selling Price	Units	Selling Price
January	40,000	$11.00	10,000	$21.00
February	88,000	$11.00	12,000	$21.00
March	92,000	$11.00	15,000	$21.00
April	100,000	$11.00	20,000	$21.00

MEL Company requires ending inventory of product equal to 20 percent of the next month's unit sales. Beginning inventory in January was 4,000 practice bats and 600 match bats.

Required:

Construct a production budget for match bats line for MEL Company for the first three months of the coming year and answer the following question.

I. Units that must be produced in the month of January:   

II. Estimated ending inventory of February

III. Units that must be produced in the month of March

Answer 1

Production Budget (Match Bats)
	January	February	March
Expected Sales units	10000	12000	15000
Add Desired ending inventory	2400	3000	4000
Total Needs	12400	15000	19000
Less Beginning Inventory	600	2400	3000
Budgeted Production Units	11800	12600	16000

I. Units that must be produced in the month of January: 11800 units

II. Estimated ending inventory of February : 3000 units

III. Units that must be produced in the month of March : 16000 units