Question

Production Budget

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	880		1,430
Second quarter, 20Y1	2,420		1,540
Third quarter, 20Y1	6,160		5,830
Fourth quarter, 20Y1	5,060		4,290
First quarter, 20Y2	990		1,320

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.

Required:

Prepare a production budget for each quarter for 20Y1 and for the year in total.

Stillwater Designs
Production Budget for S12L7
For the Year Ended December 31, 20Y1
	1st Qtr.	2nd Qtr.	3rd Qtr.	4th Qtr.	Year
Sales
Desired ending inventory
Total needs
Less: Beginning inventory
Units produced

Prepare a production budget for each quarter for 20Y1 and for the year in total. If required, round your answers to nearest whole value.

Stillwater Designs
Production Budget for S12L5
For the Year Ended December 31, 20Y1
	1st Qtr.	2nd Qtr.	3rd Qtr.	4th Qtr.	Year
Sales
Desired ending inventory
Total needs
Less: Beginning inventory
Units produced

Answer 1

Solution:

Stillwater Designs
Production Budget for S12L7
For the Year Ended December 31, 20Y1
	1st Qtr.	2nd Qtr.	3rd Qtr.	4th Qtr.	Year
Sales	880	2420	6160	5060	14520
Desired ending inventory	484	1232	1012	198	198
Total needs	1364	3652	7172	5258	14718
Less: Beginning inventory	340	484	1232	1012	340
Units produced	1024	3168	5940	4246	14378

Stillwater Designs
Production Budget for S12L5
For the Year Ended December 31, 20Y1
	1st Qtr.	2nd Qtr.	3rd Qtr.	4th Qtr.	Year
Sales	1430	1540	5830	4290	13090
Desired ending inventory	462	1749	1287	396	396
Total needs	1892	3289	7117	4686	13486
Less: Beginning inventory	170	462	1749	1287	170
Units produced	1722	2827	5368	3399	13316