Question

# Tyler Co. Production Budget April, May and June April May June Next month’s budgeted sales (units)...

 Tyler Co. Production Budget April, May and June April May June Next month’s budgeted sales (units) % % % 0 0 0 Units to be produced 0 0 0

Tyler Co. predicts the following unit sales for the next four months: April, 3,600 units; May, 4,700 units; June, 6,700 units; and July, 3,000 units. The company’s policy is to maintain finished goods inventory equal to 20% of the next month’s sales. At the end of March, the company had 700 finished units on hand.

Prepare a production budget for each of the months of April, May, and June.

Production budget for the months of April, May, and June

·

 April May June Next month's budgeted sales 4,700 6,700 3,000 Ending inventory percentage 20% 20% 20% Ending inventory of finished goods 4,700 x 20% = 940 6,700 x 20% = 1,340 3,000 x 20% = 600 Sales units 3,600 4,700 6,700 Total inventory needs 4,540 6,040 7,300 Beginning inventory of finished goods - 700 - 940 - 1,340 Units to be produced 3,840 5,100 5,960

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