E8–2 Time allowed: 10 minutes Down Under Products Ltd of Australia has budgeted sales of its popular boomerang for the next four months as follows:

The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month stock levels must equal 10% of the following month’s sales. The stock at the end of March was 5,000 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.

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Sales in units 50,000 April May 75,000 June 90,000 July 80,000