Preparing a Production Budget Patrick Inc. makes industrial solvents. In the fir
ID: 2517229 • Letter: P
Question
Preparing a Production BudgetPatrick Inc. makes industrial solvents. In the first 4 months of the coming year, Patrick expects the following unit sales:
January 41,000 February 38,000 March 50,000 April 51,000 Patrick's policy is to have 17% of next month's sales in ending inventory. On January 1, it is expected that there will be 4,550 drums of solvent on hand.
Required: Preparing a Production Budget Patrick Inc. makes industrial solvents. In the first 4 months of the coming year, Patrick expects the following unit sales January February March April 41,000 38,000 50,000 51,000 Patrick's policy is to have 17% of next month's sales in ending inventory. On anuary 1, it is expected that there will be 4,550 drums of solvent on hand Required: Prepare a production budget for the first quarter of the year. Show the number of drums that should be produced each month as well as for the quarter in total. If required, round your answers to the nearest whole unit Patrick Inc. Production Budget For the Coming Quarter 1st Quarter Total January February March 41,00038,00050,000180,000 Sales Desired ending inventory Total needs Less Beginning inventory Units to be 6,460 | 8,500 8,670 8,670 7,460 46 188,670 4,550 6,460 8,500 4,550 42,910)?( 40,040 ) i84:120) ? 50,170
Explanation / Answer
Prepare production budget :
January February March 1st quarter total Sales 41000 38000 50000 129000 Add: Desired ending inventory 6460 8500 8670 8670 Total needs 47460 46500 58670 137670 Less: Beginning inventory -4550 -6460 -8500 -4550 Units to be produced 42910 40040 50170 133120