Question

Part 1

Patrick Inc. sells industrial solvents in 5-gallon drums. Patrick expects the following units to be sold in the first 3 months of the coming year:

January	41,000
February	38,000
March	50,000

The average price for a drum is $43.

Required:

Prepare a sales budget for the first 3 months of the coming year, showing units and sales revenue by month and in total for the quarter. Do not include a multiplication symbol as part of your answer.

Patrick Inc.
Sales Budget
For the Coming Quarter
	January	February	March	1st Quarter Total
Units
Price	$	$	$	$
Sales	$	$	$	$

Part 2

Preparing a Production Budget

Patrick Inc. makes industrial solvents. In the first 4 months of the coming year, Patrick expects the following unit sales:

January	41,000
February	38,000
March	50,000
April	51,000

Patrick's policy is to have 16% of next month's sales in ending inventory. On January 1, it is expected that there will be 4,600 drums of solvent on hand.

Required:

Prepare a production budget for the first quarter of the year. Show the number of drums that should be produced each month as well as for the quarter in total. If required, round your answers to the nearest whole unit.

Patrick Inc.
Production Budget
For the Coming Quarter
	January	February	March	1st Quarter Total
Sales
Desired ending inventory
Total needs
Less: Beginning inventory
Units to be produced

Answer 1

Sales Budget- Patrick Inc.
	Jan	Feb	March	Totaal
Quantity Sold (a)	41000	38000	50000	129000
Selling price / Unit (b)	$43.00	$43.00	$43.00	$43.00
Estimated Sales Value (axb)	$1,763,000.00	$1,634,000.00	$2,150,000.00	$5,547,000.00
Production Budget
	Jan	Feb	March	Total
Sales (a)	41,000	38,000	50,000	129,000
Add: Desired Ending Inventory (16% of Next Month Sales)	6,080	8,000	8,160	8,160
Total Needs	47,080	46,000	58,160	137,160
Less: Beginning Inventory	4,600	6,080	8,000	4,600
Unit to be Produced	42,480	39,920	50,160	132,560