Arnd is learning the ropes in his new position, looking over the production department's budgets from the past two years. He notices that his production department requires information from the sales division; in turn, the production budget is sent on to other departments. He now sees how the budget pieces fit together and how the production area contributes to the bigger picture. After seeing these connections, he gathers the following information.

	January	February	March	April
Budgeted sales volume (units)	3,200	2,700	3,500	3,800

Additional information:

• Budgeted selling price is $25 per unit.
• Desired monthly ending inventory is 15% of the next month's sales.
• Beginning finished goods inventory on January 1 is 420 units.

Arnd recognizes the production department currently holds slightly less inventory than planned, but for good reasonDecember sales exceeded its goals!

1. Prepare the sales forecast for the first quarter of the upcoming year.

2.Prepare the production budget for the first quarter of the upcoming year.

3. Help Arnd list the operating budgets that would follow his department's production budget, and explain whether or not those subsequent budgets must be completed in a certain order.

4. Help Arnd evaluate whether his current desired inventory level is sufficient. What factors should he consider in making this determination?