Question - You have been asked to prepare the production budget for Diamond Toasters. To keep production and sales moving smoothly, the company has the following inventory requirements:
1. The finished goods inventory on hand at the end of each month must be equal to 24,000 units plus 20% of next month's sales. The finished goods inventory on March 31 is 28,000 units.
2. The company maintains no work in process inventories The sales budget for Diamond Toasters over the next 4 months is:
Budgeted Sales in Units
April 32.000
May 28.000
June 34,000
July 36,000
Prepare a production budget for Diamond Toasters for April, May and June.