Prepare a production budget for the upcoming year

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Reference no: EM133073822

Question - The following information relates to a company that produces a single product. Each unit requires three pounds of material. Inventory requirements are as follows:

a. The finished goods inventory on hand at the end of each month must be equal to 8,000 units plus 28% of the next month's sales. The finished goods inventory on December 31 is budgeted based on this requirement.

b. The raw materials inventory on hand at the end of each month must be equal to one- half of the following month's production needs for raw materials. The raw materials inventory on December 31 is budgeted based on this requirement.

c. The company maintains no work in process inventories.

A sales budget for the company for the first and second quarters of the upcoming year follows.

 

Budgeted Sales in Units

January

39,000

February

49,000

March

69,000

April

34,000

May

19,000

June

9,000

Required - Prepare a production budget for the upcoming year for the months of January, February, March and April.

Reference no: EM133073822

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