Question: Production Budget Pumpro Inc. produces submersible water pumps for ponds and cisterns. The unit sales for selected months of the year are as follows:
Unit Sales
April 200,000
May 240,000
June 220,000
July 260,000
Company policy requires that ending inventories for each month be 30 percent of next month's sales. However, at the beginning of April, due to greater sales in March than anticipated, the beginning inventory of water pumps is only 40,000.
Required: Prepare a production budget for the second quarter of the year. Show the number of units that should be produced each month as well as for the quarter in total.