QS 20-7 (Algo) Manufacturing: Production budget LO P1 Atlantic Surf manufactures surfboards. The company's budgeted sales units for the next three months is shown below. Company policy is to maintain finished goods inventory equal (in units) to 40% of the next month's unit sales. As of June 30, the company has 1,920 finished surfboards in inventory. Budgeted sales units July 4,800 August 7,300 September 2,800 Prepare the production budget for the months of July and August. ATLANTIC SURF Production Budget July August 4,800 7,300 Budgeted sales units Add: Desired ending inventory Next period budgeted sales units 7,300 2,800 Ratio of inventory to future sales 40% 40% Desired ending inventory units 2,920 1,120 Total required units 7,720 8,420 Less: Beginning inventory units 1,920 Units to be produced 5,800