Turney Company produces and sells automobile batteries, the heavy-duty HD-240. The 2017 sales forecast is as follows. Quarter HD-240 1 5,200 2 7,150 3 8,320 4 10,190 The January 1, 2017, inventory of HD-240 is 2,080 units. Management desires an ending inventory each quarter equal to 40% of the next quarter's sales. Sales in the first quarter of 2018 are expected to be 25% higher than sales in the same quarter in 2017. Prepare quarterly production budgets for each quarter and in total for 2017.

Q1 Production 5,980 batteries

Q2 Production 7,618 batteries

Q3 Production 9,068 batteries

Q4 Production 8,714 batteries

Total production for the year is 31,380

Explanation:

Turney Company 2017 Quarterly Production Budgets

Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018

Sales 5,200 7,150 8,320 10,190 6,500*

Opening inventory (2,080) (2,860) (3328) (4076) (2600)

Closing inventory 2,860 3328 4076 2600 -

Production required 5,980 7,618 9,068 8,714

Sales in Q1 2018=Q1 2017 * (1+25%)

Q1 2017 Sales is 5,200

sales in Q1 2018=5,200 * (1+25%)

=5,200 * (1+0.25)

=5,200*1.25

=$6500*

Sample calculation of closing inventory=40%*next quarter's sales

Q1 2017 closing inventory = 7150*40%=2860

Q 2 2017 closing inventory = 8320*40%=3328

Q 3 2017 closing inventory = 10190*40%=4076

Q 4 2017 closing inventory = 6,500*40%=2600

Total production for the year = 5980+7618+9068+8714

=31,380