Preparing a production budget with the given data.
Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows:
|
Sales in units
|
|
April
|
50,000
|
|
May
|
75,000
|
|
June
|
90,000
|
|
July
|
80,000
|
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 5,000 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.