Question
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A sales budget is given below for one of the products
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manufactured by Vincent, Ltd.
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Month/Sales Budget in Units
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July/18,000
August/20,000
September/24,000
October/26,000
November/19,000
December/16,000
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The inventory of
finished goods at the end of each month must be
equal to 5,000
units plus 10% of the next month's sales.
On June 30, the
finished goods inventory totaled 6,800 units.
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Each unit of product requires three ounces of a special
liquid extract known as SV-6. Sometimes the extract is in
short supply; for this reason, the company has a policy of
maintaining an inventory at the end of each month equal to one
half of the next month's production needs. This requirement was met
on July 1 of the current year.
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Required: Prepare a budget showing the quantity of SV-6 to be
purchased for
September.
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