Down Under Products Ltd of Australia has budgeted sales of i

Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows April May June July Sales in Units 90,000 95,000 130,000 100,000 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 20% of the following month\'s sales The inventory at the end of March was 18,000 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 Down Under Products, Ltd Production Budget April May June Quarter Budgeted units sales Total needs Required production in units

Solution

Answer 1 Down Under Products Ltd. Production Budget April May June Quarter Budgeted Unit Sales 90000 95000 130000 315000 Add : Ending Inventory 19000 26000 20000 20000 Total Needs 109000 121000 150000 335000 Less : Beginning Inventory 18000 19000 26000 18000 Required Production in Units 91000 102000 124000 317000 Answer 2 Mink Caress Direct Material Budget - Year 2 Quarter First Second Third Fourth Year Required production in units of finished Goods 62000 92000 152000 102000 408000 Units of raw material needed per unit of finished goods 3 3 3 3 3 Units of raw material needed to meet production 186000 276000 456000 306000 1224000 Add : Ending Inventory of raw material 55200 91200 61200 43200 43200 Total Units of raw material needed 241200 367200 517200 349200 1267200 Less : Beginning Inventory of raw material 37200 55200 91200 61200 37200 Units of raw materials to be purchased 204000 312000 426000 288000 1230000 Unit cost of raw materials $1.60 $1.60 $1.60 $1.60 $1.60 Cost of raw materials to be purchased $326,400 $499,200 $681,600 $460,800 $1,968,000