Question

Turney Company produces and sells automobile batteries, the heavy-duty HD-240. The 2020 sales forecast is as follows.

Quarter		HD-240
1		5,100
2		7,330
3		8,220
4		10,240

The January 1, 2020, inventory of HD-240 is 2,040 units. Management desires an ending inventory each quarter equal to 40% of the next quarter’s sales. Sales in the first quarter of 2021 are expected to be 25% higher than sales in the same quarter in 2020.

Prepare quarterly production budgets for each quarter and in total for 2020.

TURNEY COMPANY Production Budget choose the accounting period For the Month Ended December 31, 2020For the Quarter Ended December 31, 2020For the Year Ending December 31, 2020
Product HD-240
	Quarter
		1		2		3		4		Year
select an opening production budget item Desired Ending Finished Goods UnitDirect Materials Per UnitDesired Ending Direct MaterialsDirect Materials PurchasesExpected Unit SalesRequired Production UnitsTotal Materials RequiredTotal Required UnitsBeginning Finished Goods UnitBeginning Direct Materials		enter a number of units		enter a number of units		enter a number of units		enter a number of units
select between addition and deduction AddLess : select a production budget item Desired Ending Direct MaterialsTotal Materials RequiredDesired Ending Finished Goods UnitDirect Materials Per UnitTotal Required UnitsBeginning Finished Goods UnitDirect Materials PurchasesExpected Unit SalesRequired Production UnitsBeginning Direct Materials		enter a number of units		enter a number of units		enter a number of units		enter a number of units
select a summarizing line for the first part Total Materials RequiredDirect Materials PurchasesExpected Unit SalesDesired Ending Direct MaterialsRequired Production UnitsDesired Ending Finished Goods UnitDirect Materials Per UnitTotal Required UnitsBeginning Direct MaterialsBeginning Finished Goods Unit		enter a total number of units for the first part		enter a total number of units for the first part		enter a total number of units for the first part		enter a total number of units for the first part
select between addition and deduction AddLess : select a production budget item Beginning Finished Goods UnitTotal Required UnitsRequired Production UnitsDirect Materials Per UnitExpected Unit SalesDirect Materials PurchasesTotal Materials RequiredBeginning Direct MaterialsDesired Ending Finished Goods UnitDesired Ending Direct Materials		enter a number of units		enter a number of units		enter a number of units		enter a number of units
select a closing production budget item Beginning Finished Goods UnitDirect Materials Per UnitExpected Unit SalesDesired Ending Direct MaterialsTotal Required UnitsRequired Production UnitsDesired Ending Finished Goods UnitTotal Materials RequiredDirect Materials PurchasesBeginning Direct Materials		enter a total number of units		enter a total number of units		enter a total number of units		enter a total number of units		enter a total number of units

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Answer 1

Solution

TURNEY COMPANY
Production budget
For year ending December 2020
	Product HD-240
	Quarter
	1	2	3	4	Year
Units to be sold	5100	7330	8220	10240	30890
Desired Ending Finished Inventory	2932	3288	4096	2550*	2550
Total Units needed	8032	10618	12316	12790	33440
Less : Beginning Finished Inventory	2040	2932	3288	4096	2040
Units to be Produced	5992	7686	9028	8694	31400

*5100 x 125% x 40%