Question

Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows: Unit Sales April 56,000 May 75,000 June 96,000 July 83,000 The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month inventory levels must equal 10% of the following month’s unit sales. The inventory at the end of March was 5,600 units. Required: Prepare a production budget by month and in total, for the second quarter.

Answer 1

Calculating Budgeted Purchase Particulars April May Expected unit saes 56000 Add : Closing Finished goods 7500 Required units 63500 Less : Opening Finished goods 5600 Required Production units required 579000 June Total 75000 96000 227000 9600 8300 8300 84600104300235300 75001 9600 5600 771001 947001229700