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Offenbach & Son has just made its sales forecasts and its marketing department estimates that the...

Offenbach & Son has just made its sales forecasts and its marketing department estimates that the company will sell 216,600 units during the coming year. In the past, management has maintained inventories of finished goods at approximately one month’s sales. The inventory at the start of the budget period is 14,500 units. Sales occur evenly throughout the year.

Required:

Estimate the production level required for the coming year to meet these objectives. (Do not round intermediate calculations.)

Sunset Motors, Inc., makes small motors for appliances and other uses. The company develops plans using an annual budgeting cycle. For next year, the production budget is 92,000 units. Inventories are expected to decrease by 7,800 units.

Required:

What is the sales budget for the coming year?

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Answer #1

a) Estimated production

Coming year
Sales unit 216600
Add: Desired ending inventory (216600/12) 18050
234650
Less: Beginning inventory -14500
Production Units 220150

b) Sales budget = Production units+Inventory Decrease by = 92000+7800 = 99800 Units

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