Making the production Budget

ABC Company has prepared a unit sales budget for the upcoming months (2020-2021) as follows:

ABC Company Sales Budget 2020-2021MonthsUnits

Months

Units

July

5,000

December

30,000

August

7,500

January

35,000

September

10,000

February

25,000

October

15,000

March

10,000

November

20,000

April

6,000

ABC has a policy to maintain inventory levels equal to 30% of the coming month's sales requirements. Inventory on July 1, 2020 is projected to be 1,200 units.Required:

1. Prepare a production budget for ABC Company for July to December 2020. [6 marks].

2. Explain how economic trends due to the COVID-19 pandemic may impact on the sales forecasting of the company [2 marks]

3. As a Management Accountant, what would be your advice to the company management during the COVID-19 pandemic when making budget decisions? [4 marks]