Production Budget Aqua-pro Inc
Production Budget
Aqua-pro Inc. produces submersible water pumps for ponds andcisterns. The unit sales for selected months of the year are asfollows:
| Unit Sales | |
| April | 189,000 |
| May | 231,000 |
| June | 210,000 |
| July | 252,000 |
Company policy requires that ending inventories for each monthbe 25% of next month’s sales. However, at the beginning of April,due to greater sales in March than anticipated, the beginninginventory of water pumps is only 21,000.
Required:
Prepare a production budget for the second quarter of the year.Show the number of units that should be produced each month as wellas for the quarter in total.
| Aqua-pro Inc. | ||||
| Production Budget | ||||
| For the Second Quarter | ||||
| April | May | June | Total | |
| Sales | ||||
| Desired ending inventory | ||||
| Total needs | ||||
| Less: Beginning inventory | ||||
| Units produced | ||||
Answer:
| Aqua-Pro Inc | ||||
| Production Budget | ||||
| For the Second Quarter | ||||
| April | May | June | Total | |
| Sales | $ 1,89,000 | $ 2,31,000 | $ 2,10,000 | $ 6,30,000 |
| Add:Desired EndingInventory | $ 57,750 | $ 52,500 | $ 63,000 | $ 1,73,250 |
| Total Inventory required | $ 2,46,750 | $ 2,83,500 | $ 2,73,000 | $ 8,03,250 |
| Less:Beginning Inventory | $ -21,000 | $ -57,750 | $ -52,500 | $ -1,31,250 |
| Purchases | $ 2,25,750 | $ 2,25,750 | $ 2,20,500 | $ 6,72,000 |
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