Production Budget [LO73]

Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows:

The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month inventory levels must equal 10% of the following months sales. The inventory at the end of March was 5,000 units.

Required:

Prepare a production budget for the second quarter; in your budget, show the number of units to be produced each month and for the quarter in total.

\begin{tabular}{|cc|} \hline & Sales in Units \\ \hline April & 50,000 \\ May & 75,000 \\ June & 90,000 \\ July & 80,000 \\ \hline \end{tabular}