Hi , Can you please help and provide formulas? Buff Company expects to meet futu

Question

Hi , Can you please help and provide formulas?

Buff Company expects to meet future sales requirements by maintaining an ending inventory equal to 20% of the next quarter's budgeted sales volume. Use this and the information below to complete the Production Budget. Ending finished goods inventory on December 31, 2016 200 Expected sales volume for quarter 1 of year 2018: 2,500 Buff Company Production Budget For the year ending December 31, 2017 Quarter 2 3 4 Year Expected unit sales Add: Desired ending finished goods units Total required units Less: Beginning finished goods units Required production units 1,500 2,000 l-2000

Explanation / Answer

Ending finished goods units in one quater is the beginning finished goods units of next Quater.

Buff Company Production Budget For the year ending December 31 , 2017 Quater 1 2 3 4 Expected unit sales 1000 2500 1500 2000 Add: Desired ending finished goods unit (working note 1) 500 300 400 500 Total Required Units 1500 2800 1900 2500 Less: Beginning finished goods units (working note 2) 200 500 300 400 Required production Units 1300 2300 1600 2100 Working Notes 1 Desired ending finished goods units = 20% of next quater's sales Quater 1 = 2500 X 20% = 500 Quater 2 = 1500 X 20% = 300 Quater 3= 2000 X 20% = 400 Quater 4 = *2500 X 20% = 500 (* Expected unit sales in first quater of year 2018 given in question) 2

Ending finished goods units in one quater is the beginning finished goods units of next Quater.

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