Question

QS 7-17 Manufacturing: Production budget LO P1 Forrest Company manufactures phone chargers and has a JIT policy that ending inventory must equal 10 % of the next month's sales. It estimates that October's actual ending inventory will consist of 50,000 units. November and December sales are estimated to be 500,000 and 370,000 units, respectively. Compute the number of units to be produced that would appear on the company's production budget for the month of November FORREST COMPANY Production Budget For Month Ended November 30 Budgeted ending inventory units Budgeted sales for the month units Required units of available production Budgeted beginning inventory units Units to be produced

Answer 1

Given that ending inventory is 10% of next month sales. We are calculating production budget for the month of November So, its a beginning inventory will be ending inventory of previous month i.e, October . So, October Eriding inventory (also November Beginning inventory) - 500,000x10% = 50,000 units. - November ending i inventory is 100% of December sales $ 370,000 x 10% - 37000 units. Cuven November month sales = 500,000 units

Production budget for month ended November 30

Budgeted ending inventory units	50,000
Budgeted sales for the month units	500,000
Required units of available production	550,000
Budgeted beginning inventory units	37,000
Units to be produced	513,000