Question

Production Budget

Assume that Stillwater Designs produces two automotive subwoofers: S12L7 and S12L5. The S12L7 sells for $475, and the S12L5 sells for $300. Projected sales (number of speakers) for the coming five quarters are as follows:

	S12L7		S12L5
First quarter, 20Y1	840		1,365
Second quarter, 20Y1	2,310		1,470
Third quarter, 20Y1	5,880		5,565
Fourth quarter, 20Y1	4,830		4,095
First quarter, 20Y2	945		1,260

The vice president of sales believes that the projected sales are realistic and can be achieved by the company.

Stillwater Designs needs a production budget for each product (representing the amount that must be outsourced to manufacturers located in Asia). Beginning inventory of S12L7 for the first quarter of 20Y1 was 340 boxes. The company's policy is to have 20% of the next quarter's sales of S12L7 in ending inventory. Beginning inventory of S12L5 was 170 boxes. The company's policy is to have 30% of the next quarter's sales of S12L5 in ending inventory.

Required:

Prepare a production budget for each quarter for 20Y1 and for the year in total.

Stillwater Designs
Production Budget for S12L7
For the Year Ended December 31, 20Y1
	1st Qtr.	2nd Qtr.	3rd Qtr.	4th Qtr.	Year
Sales
Desired ending inventory
Total needs
Less: Beginning inventory
Units produced

Prepare a production budget for each quarter for 20Y1 and for the year in total. If required, round your answers to nearest whole value.

Stillwater Designs
Production Budget for S12L5
For the Year Ended December 31, 20Y1
	1st Qtr.	2nd Qtr.	3rd Qtr.	4th Qtr.	Year
Sales
Desired ending inventory
Total needs
Less: Beginning inventory
Units produced

Answer 1

Stillwater Designs
Production Budget for S12L7
For the Year Ended December 31, 20Y1
	1st Qtr.	2nd Qtr.	3rd Qtr.	4th Qtr.	Year
Sales	840	2310	5880	4830	13860
Desired ending inventory	462	1176	966	189*	189
Total needs	1302	3486	6846	5019	14049
Less: Beginning inventory	340	462	1176	966	340
Units produced	962	3024	5670	4053	13709

*945 x 20%

Stillwater Designs
Production Budget for S12L5
For the Year Ended December 31, 20Y1
	1st Qtr.	2nd Qtr.	3rd Qtr.	4th Qtr.	Year
Sales	1365	1470	5565	4095	12495
Desired ending inventory	441	1670	1229	378**	378
Total needs	1806	3140	6794	4473	12873
Less: Beginning inventory	170	441	1670	1229	170
Units produced	1636	2699	5124	3245	12703

**1260 x 30%