Down Under Products, Ltd., of Australia has budgeted sales of its popular boomer

Question

Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows: The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month inventory levels must equal 10% of the following months sales. The inventory at the end of March was 8,600 units. Required: Prepare a production budget for the second quarter; in your budget, show the number of units to be produced each month and for the quarter in total.

Explanation / Answer

Particulars April May June Quarter Sales ( Units) 86000 90000 126000 302000 Opening Units 8600 9000 12600 30200 Closing Inventory 9000 12600 9800 31400 Production 86400 93600 123200 303200

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