Exercise 5-12

Sheridan manufactures competition stunt kites. In November, Jerry Box prepared the following production budget for the first quarter of the coming year. Desired ending inventory is based on the following month's budgeted sales.

			January		February		March		Quarter
	Budgeted unit Sales		25,000		40,000		30,400		95,400
	Budgeted ending inventory		8,000		6,080		2,510		2,510
	Total units required		33,000		46,080		32,910		97,910
	Beginning inventory		5,000		8,000		6,080		5,000
	Budgeted production		28,000		38,080		26,830		92,910

Following higher-than-expected sales in December, Jerry conducted an inventory count on January 2 and discovered that the company had only 2,880 completed kites on hand. He decided that given the brisk sales in December, the company should increase its desired ending inventory level from 20 to 25 percent of the next month's sales volume.

(a)	Prepare a new production budget for the first quarter. (Round answers to 0 decimal places, e.g. 5,275.)

(a) Prepare a new production budget for the first quarter. (Round answers to 0 decimal places, e.g. 5,275.) January February March Quarter