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 4,400 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
Patrick Inc.
Production Budget
For the Coming Quarter
January February March 1st Quarter Total
Sales 41,000 38,000 50,000 129,000
Desired ending inventory 38,000 x 21% = 7,980 50,000 x 21% = 10,500 51,000 x 21% = 10,710 29,190
Total needs 48,980 48,500 60,710 158,190
Less: Beginning inventory -4,400 -7,980 -10,500 22,880
Units to be produced 44,580 40,520 50,210 135,310
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