Question 5 (13 Marks) To be done on Excel

The marketing department of Leblanc Ltd has submitted the following sales forecast for the upcoming financial year (all sales are on account):

	1st quarter	2nd quarter	3rd quarter	4th quarter
Budgeted unit sales	11,000	12,000	14,000	13,000

The company expects to start the first quarter with 1,650 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 15% of the next quarters budgeted sales. The desired ending finished goods inventory for the fourth quarter is 1,850.

a.

Prepare the companys production budget for the upcoming financial year. (6.5 Marks)

b.

The companys management wants to know how the results would change if they change some of the assumptions they made in preparing the production budget above. The new sales forecast for the company is as follows:

	1st quarter	2nd quarter	3rd quarter	4th quarter
Budgeted unit sales	9,000	10,000	10,500	11,500

The company expects to start the first quarter with 1,800 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 10% of the next quarters budgeted sales. The desired ending finished goods inventory for the fourth quarter is 1,600.

Prepare the companys revised production budget for the upcoming financial year accordingly. (6.5 Marks)