Down Under Products, Limited, of Australia has budgeted sales of its popular boomerang for the next four months as follows:     Unit Sales April 76,000 May 85,000 June 116,000 July 93,000 The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month inventory levels must equal 15% of the following month’s unit sales. The inventory at the end of March was 11,400 units. Required: Prepare a production budget by month and in total, for the second quarter.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Down Under Products, Limited, of Australia has budgeted sales of its popular boomerang for the next four months as follows:

 

 

Unit Sales

April

76,000

May

85,000

June

116,000

July

93,000

The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month inventory levels must equal 15% of the following month’s unit sales. The inventory at the end of March was 11,400 units.

Required:

Prepare a production budget by month and in total, for the second quarter.

### Production Budget Preparation for Down Under Products, Limited

Down Under Products, Limited, of Australia has projected the sales of its popular boomerang for the coming four months as follows:

| Month  | Unit Sales |
|--------|------------|
| April  | 76,000     |
| May    | 85,000     |
| June   | 116,000    |
| July   | 93,000     |

#### Objective:
The company aims to prepare a production budget for the second quarter, considering that end-of-month inventory levels must constitute 15% of the next month’s sales. The inventory at the end of March was 11,400 units.

#### Task:
Prepare a detailed production budget, breaking it down by month and in total for the second quarter.

#### Provided Table:
The table below outlines the format that needs to be completed to prepare the production budget.

| Down Under Products, Limited | April  | May  | June    | Quarter |
|-------------------------------|--------|------|---------|---------|
| **Production Budget**         |        |      |         |         |
| Budgeted unit sales           |        |      |         |         |
| **Total needs**               |        |      |         |         |
| Required production in units  |        |      |         |         |

1. **Budgeted unit sales:** This includes the forecasted sales for each month.
2. **Total needs:** This involves calculating the total number of units needed for each month to meet the sales forecast and desired inventory levels.
3. **Required production in units:** The number of units that need to be produced each month to meet the total needs, after accounting for the existing inventory.

This information forms the foundation of the production planning process to ensure that Down Under Products, Limited can successfully meet its sales targets while maintaining the required inventory levels.
Transcribed Image Text:### Production Budget Preparation for Down Under Products, Limited Down Under Products, Limited, of Australia has projected the sales of its popular boomerang for the coming four months as follows: | Month | Unit Sales | |--------|------------| | April | 76,000 | | May | 85,000 | | June | 116,000 | | July | 93,000 | #### Objective: The company aims to prepare a production budget for the second quarter, considering that end-of-month inventory levels must constitute 15% of the next month’s sales. The inventory at the end of March was 11,400 units. #### Task: Prepare a detailed production budget, breaking it down by month and in total for the second quarter. #### Provided Table: The table below outlines the format that needs to be completed to prepare the production budget. | Down Under Products, Limited | April | May | June | Quarter | |-------------------------------|--------|------|---------|---------| | **Production Budget** | | | | | | Budgeted unit sales | | | | | | **Total needs** | | | | | | Required production in units | | | | | 1. **Budgeted unit sales:** This includes the forecasted sales for each month. 2. **Total needs:** This involves calculating the total number of units needed for each month to meet the sales forecast and desired inventory levels. 3. **Required production in units:** The number of units that need to be produced each month to meet the total needs, after accounting for the existing inventory. This information forms the foundation of the production planning process to ensure that Down Under Products, Limited can successfully meet its sales targets while maintaining the required inventory levels.
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