Production Budget Aqua-pro Inc. produces submersible water pumps for ponds and cisterns. The unit sales for selected months of the year are as follows: Unit Sales April 180,000 May 220,000 June 200,000 July 240,000 Company policy requires that ending inventories for each month be 25% of next month's sales. However, at the beginning of April, due to greater sales in March than anticipated, the beginning inventory of water pumps is only 21,000. Prepare a production budget for the second quarter of the year. Show the number of units that should be produced each month as well as for the quarter in total.

Question

Business

Shaun Oneal

5 April, 06:15

Production Budget Aqua-pro Inc. produces submersible water pumps for ponds and cisterns. The unit sales for selected months of the year are as follows: Unit Sales April 180,000 May 220,000 June 200,000 July 240,000 Company policy requires that ending inventories for each month be 25% of next month's sales. However, at the beginning of April, due to greater sales in March than anticipated, the beginning inventory of water pumps is only 21,000. Prepare a production budget for the second quarter of the year. Show the number of units that should be produced each month as well as for the quarter in total.

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Ralph Mccann · Answer 1

Production Budget April 214,000

Production Budget May 215,000

Production Budget June 210,000

Production Budget Total 639,000

Explanation:

We use the formula to calculate the production budget

Production = Sales + Ending Inventory - Opening Inventory.

Aqua-pro Inc.

Production Budget

For the Quarter

Particulars April May June July Total

Unit Sales 180,000 220,000 200,000 240,000

Add Desired

Ending Inventory 55,000 55,000 60,000 - -x---x---x--

Less Opening

Inventory 21,000 55,000 50,000 60,000

Production Units 214,000 215,000 210,000 639,000

Ending Inventory Calculations

April 25% of 220,000 = 55,000

May 25% of 200,000 = 55,000

June 25% of 240,000 = 60,000