PREPARING A PRODUCTION BUDGET Sherwood, Inc. makes pet crates. In the first four months of the coming year, Sherwood expects the following unit sales:

January 30,000 February 29,000 March 31,000 April 34,000 Sherwood’s policy is to have 15 percent of next month’s sales in ending inventory. On January 1, it is expected that there will be 4,200 crates on hand.

Required:

Prepare a production budget for the first quarter of the year. Show the number of crates that should be produced each month as well as for the quarter in total.

Cornerstone Exercise