Exercise 07-3 Manufacturing: Production budget LO P1

Ruiz Co. provides the following sales forecast for the next four months.

	April		May		June		July
Sales (units)	560		640		590		680

The company wants to end each month with ending finished goods inventory equal to 20% of next month's forecasted sales. Finished goods inventory on April 1 is 112 units. Prepare a production budget for the months of April, May, and June.

RUIZ CO.
Production Budget
For April, May, and June
	April	May	June
Next month's budgeted sales (units)	640	590	680
Ratio of inventory to future sales	20%	20%	20%
Budgeted ending inventory (units)	128	118	136
Budgeted unit sales for month	560	640	590
Required units of available production	688	758	726
Budgeted beginning inventory (units)		128	118
Units to be produced		630	608