Question

Palmgren Company produces consumer products. The sales budget for four months of the year is presented below. Unit Sales Dollar Sales July 32,500 $975,000 August 33,700 1,061,550 September 38,000 1,197,000 October 36,000 1,141,200 Company policy requires that ending inventories for each month be 25 percent of next month's sales. At the beginning of July, the beginning inventory of consumer products met that pollcy Required: Prepare a production budget for the third quarter of the year. Show the number of units that should be produced each month as well as for the quarter in total. Palmgren Company Production Budget For the Third Quarter July August September Total Unit sales Total needed Units produced

Answer 1

	Palmgreen Company
	Production Budget
	For the Third Quarter
		July	August	September	Total
	Unit sales	32,500	33,700	38,000	1,04,200
Add:	Ending Inventory (units)	8,425	9,500	9,000	26,925
	Total needed	40,925	43,200	47,000	1,31,125
Less:	Beginning inventory (units)	-8,125	-8,425	-9,500	-26,050
	Units to be purchased	32,800	34,775	37,500	1,05,075
	Note: Ending inventory of current months becomes the Beginning Inventory of next month and Ending Inventory is equal to 25% of next month sales and beginning inventory of July is equal to 25% of current month sales (32500 X 25%)