Patrick Inc. makes industrial solvents. In the first 4 months of the coming year, Patrick expects the following unit sales: January 41,000 February 38,000 March 50,000 April 51,000 Patrick's policy is to have 25% of next month's sales in ending inventory. On January 1, it is expected that there will be 6,700 drums of solvent on hand. Required: Prepare a production budget for the first quarter of the year. Show the number of drums that should be produced each month as well as for the quarter in total.

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Business

London

10 December, 16:42

Patrick Inc. makes industrial solvents. In the first 4 months of the coming year, Patrick expects the following unit sales: January 41,000 February 38,000 March 50,000 April 51,000 Patrick's policy is to have 25% of next month's sales in ending inventory. On January 1, it is expected that there will be 6,700 drums of solvent on hand. Required: Prepare a production budget for the first quarter of the year. Show the number of drums that should be produced each month as well as for the quarter in total.

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Salvatore Bell · Answer 1

Instructions are listed below.

Explanation:

Giving the following information:

January 41,000

February 38,000

March 50,000

April 51,000

Patrick's policy is to have 25% of next month's sales in ending inventory. On January 1, it is expected that there will be 6,700 drums of solvent on hand.

January:

Sales = 41,000

Next month sales = 38,000*0.25 = 9,500 units

Initial inventory = 6700 (-)

Total production = 43,800 units

February:

Sales = 38,000

Next month sales = 50,000*0.25 = 12,500 units

Initial inventory = 9,500 (-)

Total production = 41,000 units

March:

Sales = 50,000

Next month sales = 51,000*0.25 = 12,750 units

Initial inventory = 12,500 (-)

Total production = 50,250 units

April:

Sales = 51,000

Initial inventory = 12,500

Total production = 38,500 units

Total production = 173,550 units