Q1 Q2 Q3 Q4 Year

Sales in Units 30,000 40,000 40,000 40,000 150,000

Add desired Ending Inventory 8000 8000 8000 7,500 7,500

Calculation: Next quarter Sales X 20% 40,000*20% 40,000*20 40,000*20% Given

Total Units Needed

38,000 48,000 48,000 47,500

Less Beginning Inventory 8,000 8,000

Units to be produced

Prepare a production budget based on the following information

Elite Company manufactures filing cabinets for business offices.

Assume the companys policy is to maintain 20% of next quarters sales in ending inventory.

Finished goods inventory on January 1 is 8,000 units

We anticipate the December 31 ending inventory to be 7,500 units. From these data, we can prepare the schedule of planned production using the Sales budget as our starting place.

See Leeds Company Production Budget as reference