Production Budget Aquapro Inc produces submersible water pum

Production Budget

Aqua-pro Inc. produces submersible water pumps for ponds and cisterns. The unit sales for selected months of the year are as follows:

Company policy requires that ending inventories for each month be 25% 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 21,000.

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.

	Unit Sales
April	216,000
May	264,000
June	240,000
July	288,000

Solution

Aqua-pro-Inc. Production Budget For the Second Quarter April May June Quarter Budgeted Unit Sales 216000 264000 240000 720000 Add:Ending Inventory=(264000*25%) in April,(240000*25% in May),(288000*25%) in June 66000 60000 72000 72000 Total Needs 282000 324000 312000 792000 Less: Opening Inventory=21000 in April,Closing Stock of April is he beginning stock of may and closing stock of may is the beginning stock of June 21000 66000 60000 21000 Units Produced 261000 258000 252000 771000