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Electro Company manufactures transmissions for electric cars. Management reports ending finished goods inventory for the first quarter at 167,200 units. The following unit sales
Electro Company manufactures transmissions for electric cars. Management reports ending finished goods inventory for the first quarter at 167,200 units. The following unit sales are budgeted during the rest of the year: second quarter, 418,000 units; third quarter, 453,000 units; and fourth quarter, 254,000 units. Company policy calls for the ending finished goods inventory of a quarter to equal 40% of the next quarter's budgeted unit sales. Prepare a production budget for both the second and third quarters that shows the number of transmissions to manufacture. ELECTRO COMPANY Production Budget Budgeted sales units Add: Desired ending inventory Next period budgeted sales units Desired ending inventory units Total required units Units to produce Second Quarter Third Quarter 418,000 453,000
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