Exercise 20-4 (Algo) Manufacturing: Production budget LO P1
Blue Wave Company budgets the following unit sales for the next four months: September, 3,500 units; October, 4,300 units; November, 6,000 units; and December, 8,400 units. The company's policy is to maintain finished goods inventory equal to
70%
of the next month's unit sales. At the end of August, the company had 2,450 finished units in inventory.
Prepare a production budget for each of the months of September, October, and November.
\table[[BLUE WAVE COMPANY],[Production Budget],[,September,October,November],[Budgeted sales units,3,500,,4,300,,6,000,],[Add: Desired ending inventory,,,,,,],[Next period budgeted sales units,,,,,,],[Ratio of inventory to future sales,70,%,70,%,70,%],[Desired ending inventory units,,,,,,],[Total required units,,,,,,],[Less: Beginning inventory units,,,,,,],[Units to produce,,,,,,]]