Que Hospitable Co. provides the following sales forecast for the next four month

Question

Que Hospitable Co. provides the following sales forecast for the next four months Sales (units) 590 670 620 620 The company wants to end each month with ending finished goods inventory equal to 40% of next month's sales. Finished goods inventory on April 1 is 236 units. Assume July's budgeted production is 630 units Prepare a production budget for the months of April, May, and June HOSPITABLE CO. Production Budget For April, May, and June April May June Next month's budgeted sales (units) Ratio of inventory to future sales Budgeted ending inventory (units) Budgeted unit sales for month Required units of available production Budgeted beginning inventory (units) Units to be produced 670 40% 268 590 858 236 620 40% 248 670 918 620 40% 248 620 868 th Test #2 Acctg 4B (C - e

Explanation / Answer

Production budget :

April May June Budgeted sales unit 590 670 620 Add Desired ending inventory 268 248 248 Total needs 858 918 868 Less: Beginning inventory (236) (268) (248) Unit to produce 622 650 620

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