A sales budget is given below for one of the products manufactured by the Smart co.:

January20000 units February

,35000 units March60,000 units April40,000 units May30,000 units June25,000 units The inventory of finished goods at the end of each month should equal 10% of the next month's sales. However, on December 31 the finished goods inventory totaled only 1 ,OOO units. Each unit of product requires two specialized electrical switches. Since the production of these specialized switches by Smart's suppliers is sometimes irregular, the company has a policy of maintaining an ending inventory at the end of each month equal to 25% of the next month's production needs. This requirement had been met on January 1 of the current year. REQUIRED: I. Prepare a production budget for the first four months of the year. 2. Prepare a budget showing the quantity of switches to be purchased each month for January, February, and March and in total for the quarter.

A sales budget is given below for one of the products manufactured by the Smart Co.: The inventory of finished goods at the end of each month should equal 10% of the next month's sales. However, on December 31 the finished goods inventory totaled only 1,000 units. Each unit of product requires two specialized electrical switches. Since the production of these specialized switches by Smart's suppliers is sometimes irregular, the company has a policy of maintaining an ending inventory at the end of each month equal to 25% of the next month's production needs. This requirement had been met on January 1 of the current year. REQUIRED: 1. Prepare a production budget for the first four months of the year. 2. Prepare a budget showing the quantity of switches to be purchased each month for January, February, and March and in total for the quarter