Patrick Inc. makes industrial solvents. In the first four months of the coming y

Question

Patrick Inc. makes industrial solvents. In the first four months of the coming year, Patrick expects the following unit sales: January February March April Patrick's policy is to have 25% of next month's sales in ending inventory. On January 1 it is expected that there will be 6,700 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 41,000 38,000 50,000 51,000 Patrick Inc. Production Budget For the Coming Quarter January February March 1st Quarter Total Sales Desired ending inventory Total needs Less: Beginning inventory Units to be produced

Explanation / Answer

Units January February March April Units Units Units Units Production Budget (a) 41000 38000 50000 51000 Desired ending invetory(b) 9500 12500 12750 (25% 0f next months expecting unit Sales) Total Production Required (a+b) 50500 50500 62750 Less: Opening Inventory 6700 9500 12500 (GIVEn) Closing of - Jan) Closing of - Feb) Units to Be Manuafatured 43800 41000 50250

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