Production Budget Assume that Stillwater Designs produces tw

Production Budget

Assume that Stillwater Designs produces two automotive subwoofers: S12L7 and S12L5. The S12L7 sells for $475, and the S12L5 sells for $300. Projected sales (number of speakers) for the coming five quarters are as follows:

The vice president of sales believes that the projected sales are realistic and can be achieved by the company.

Stillwater Designs needs a production budget for each product (representing the amount that must be outsourced to manufacturers located in Asia). Beginning inventory of S12L7 for the first quarter of 20X1 was 340 boxes. The company\'s policy is to have 20% of the next quarter\'s sales of S12L7 in ending inventory. Beginning inventory of S12L5 was 170 boxes. The company\'s policy is to have 30% of the next quarter\'s sales of S12L5 in ending inventory.

A production budget for each quarter for 20X1 and for the year in total.

Production Budget for S12L7

Production Budget for S12L5

Solution

PRODUCTION BUDGET FOR S12L7

S12L7

PRODUCTION BUDGET FOR S12L5

Notes

1) The opening inventory for 1qtr is ending inventory for last quarter

The ending inventory for 1qtr is opening inventory for 2 qtr

Thank you