Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows:
| Sales in Units | |||
| April | 62,000 | ||
| May | 80,000 | ||
| June | 102,000 | ||
| July | 86,000 | ||
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 month’s sales. The inventory at the end of March was 6,200 units.
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| 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:
Desired units of ending finished goods inventory is 10% of the following month's sales in units.
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