Wednesday, 1 April 2015

Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows:

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.


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.
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Explanation: 
Desired units of ending finished goods inventory is 10% of the following month's sales in units.