Question

Brinso Supply Corporation manufactures and sells cotton gauze. Expected sales of gauze (in boxes) for upcoming months are as follows:

June		38,000
July		32,000
August		40,000
September		33,000
October		36,000
November		37,000
December		39,000

Management likes to maintain a finished goods inventory equal to 10% of the next month's estimated sales.

Prepare the company's production budget for the third quarter of this year (the months of July, August and September). Include a column for each month and a total column for the entire quarter.

Answer 1

Brinso supply Corporation Production Budget Quarter August September Quarter Total Jul Budgeted Sales Add: Desire Ending Finished goods units Total Required units Less: Beginning Finished goods unit Required production units 32,000 40,000 3300 36,000 43,300 4000 32,800 39,300 33000 3600 36,600 3300 33,300 4000 3200 1,05,400 Ending Finished goods inventory is 10% of next quarter sales July 40000 10/100 4000 August 33000* 10/100 3300 September 36000 10/100 3600 Beginning inventory is previous quarter Ending finished goods July 3200 August -4000 September 3300