Question

Harden, Inc., has budgeted sales in units for the next five months as follows:

June	7,300	units
July	5,600	units
August	7,400	units
September	7,100	units
October	5,200	units

Past experience has shown that the ending inventory for each month should be equal to 15% of the next month's sales in units. The inventory on May 31 contained 1,095 units. The company needs to prepare a production budget for the next five months.

The beginning inventory for September should be:

Answer 1

Production Budget July August September Next Month Budgeted Sales Ratio of Inventory to future sales Budgeted Ending Inventory (units) Add: Budgeted unit sales for Month Required Units of Avaialable sales 7400 5200 7100 15% 15% 15% 1065 1110 780 5600 7400 7100 8465 7880 6710 Less: Budgeted Beginning Inventory 1065 840 1110 Units To be Purchased 5870 7355 6815 Answer The Beginning Inventory for September 1065 Units

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