Question

Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows: Sales in Units 58,000 75,000 98,000 84,000 April May June July 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 15% of the following month's sales. The inventory at the end of March was 8,700 units. Required: Prepare a production budget for the second quarter; in your budget, show the number of units to be produced each month and for the quarter in total. X Answer is complete but not entirely correct. Down Under Products, Ltd., Production Budget April May June Quarter Budgeted units sales Add: Desired units of ending finished goods inventory 75,000 231,000 58,000 98,000 11,250 14,700 12,600 Total needs 69,250 89,700 110,600 231,000 Less: Units of beginning finished goods inventory 8,700 11,250 14,700 60,550 78,450 95,900 231,000 Required production in units

Answer 1

Don under product Ltd. Production Budget
	April	May	June	Quarter
Budgeted unit sales	58000	75000	98000	231000
Add: desired units of ending finished goods inventory	11250	14700	12600	12600
Total needs	69250	89700	110600	243600
Less: units of beginning finished goods inventory	8700	11250	14700	8700
Required production in units	60550	78450	95900	234900

desired units of ending finished goods inventory (quarter) includes inventor on june

units of beginning finished goods inventory (quarter) includes inventory on april.