Question

Handley produces a vitamin-enhanced dog food that is sold in Kansas. The company expects sales to be 13,800 bags in January, 14,200 bags in February, 14,000 bags in March, and 16,300 bags in April. There are 1,350 bags on hand at the start of January. Handley desires to maintain monthly ending inventory equal to 15 percent of next month’s expected sales.

Prepare the production budget for Handley for the months of January, February, and March.

Handley Production Budget For the months of January, February, and March
	January	February	March	Quarter
Unit salesDesired ending inventory of finished unitsTotal neededUnits to be producedBeginning inventory of finished units
LessAdd : Units to be producedTotal neededDesired ending inventory of finished unitsBeginning inventory of finished unitsUnit sales
Total neededBeginning inventory of finished unitsUnits to be producedUnit salesDesired ending inventory of finished units
AddLess : Beginning inventory of finished unitsTotal neededUnits to be producedUnit salesDesired ending inventory of finished units
Total neededBeginning inventory of finished unitsUnits to be producedUnit salesDesired ending inventory of finished units

Answer 1

Prepare the production budget for Handley for the months of January, February, and March.

Handley Production Budget For the months of January, February, and March
	January	February	March	Quarter
Unit sales	13800	14200	14000	42000
Desired ending inventory	2130	2100	2445	2445
Total needed	15930	16300	16445	44445
Beginning inventory of finished units	-1350	-2130	-2100	-1350
Unit to be produced	14580	14170	14345	43095