Question

Ruiz Co provides the following sales forecast for the next four months. Sales (units) April 550 May 630 June 580 July 670 The company wants to end each month with ending finished goods inventory equal to 40% of next month's forecasted sales. Finished goods inventory on April 1 is 220 units. Prepare a production budget for the months of April, May, and June. + RUIZ CO. Production Budget For April, May, and June April Next month's budgeted sales (units) 630 Ratio of inventory to futu sales 40% May June 580 670 Required units of available production Units to be produced

Answer 1

Answer

   Ruiz co

Production budget

For April, May and June

Next month budgeted sales	April	May	June
Next month budgeted sales	630	580	670
Ratio of inventory to future sales	40%	40%	40%
Expected sales in the month	550	630	580
Add Ending inventory	252	232	268
Required units of available production	802	862	848
Less beginning inventory	(220)	(252)	(232)
Units to be produced	582	610	616

Working note

Ending inventory

In April = 630 × 40% = 252 units

In May = 580 × 40% = 232 units

In June = 670 × 40% = 268 units

Unit to be produced in April 582 units , in May 610 units and in june 616 units

Beginning inventory is the ending inventory of previous month.

The above are the detailed presentation and calculation of production budget.

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