Sales and Production Budgets

Berring Company produces two products: the deluxe and the standard. The deluxe sells for $40, and the standard sells for $10. Projected sales of the two models for the coming four quarters are given below.

	Deluxe	Standard
First quarter	12,000	90,000
Second quarter	14,500	88,200
Third quarter	16,800	92,000
Fourth quarter	20,000	91,800

The president of the company believes that the projected sales are realistic and can be achieved by the company. In the factory, the production supervisor has received the projected sales figures and gathered information needed to compile production budgets. He found that 1,300 deluxes and 1,170 standards were in inventory on January 1. Company policy dictates that ending inventory should equal 20 percent of the next quarters sales for deluxes and 10 percent of next quarters sales for standards.

2. Prepare a separate production budget for each product for each of the first three quarters of the year. Production budget for deluxes: Berring Company Production Budget for Deluxes First Three Quarters of the Year Quarter 1 Quarter 2 Quarter 3 Unit sales Total needed Units produced Production budget for standards: Berring Company Production Budget for Standards First Three Quarters of the Year Quarter 1 Quarter 2 Quarter 3 Unit sales Total needed Units produced