Question

Expected quarterly unit sales for tents at Sandy’s Camping Gear are 7,500, 8,800, 3,200, and 2,900 for the next 2 years. At the start of the current year, inventory of finished tents on hand is 750 tents. Sandy’s has a desired ending inventory of 20 percent of next quarter’s sales. Create the production budget in numbers of tents for quarters one through four for the current year.

Answer 1

To create Sandy's Camping Gear's production budget, calculate the number of tents to produce each quarter by adding the quarter's sales to the desired ending inventory, then subtract the current inventory. For each subsequent quarter, subtract the previous quarter's ending inventory instead.

Step-by-step explanation:

To create the production budget for Sandy's Camping Gear, we need to calculate the number of tents Sandy's plans to produce each quarter to meet sales demand and maintain desired ending inventory levels. The desired ending inventory for each quarter is 20% of the next quarter's sales.

For example:

Desired ending inventory for Q1 = 20% of Q2 sales = 0.20 * 8,800 = 1,760 tents

Desired ending inventory for Q2 = 20% of Q3 sales = 0.20 * 3,200 = 640 tents

Desired ending inventory for Q3 = 20% of Q4 sales = 0.20 * 2,900 = 580 tents

Desired ending inventory for Q4 = 20% of Q1 next year sales = 0.20 * 7,500 (Assuming the sales pattern repeats) = 1,500 tents

Then the production budget for each quarter would be calculated as:

Production for Q1 = Q1 sales + Desired ending inventory Q1 - Beginning inventory = 7,500 + 1,760 - 750

Production for Q2 = Q2 sales + Desired ending inventory Q2 - Desired ending inventory Q1 = 8,800 + 640 - 1,760

Production for Q3 = Q3 sales + Desired ending inventory Q3 - Desired ending inventory Q2 = 3,200 + 580 - 640

Production for Q4 = Q4 sales + Desired ending inventory Q4 - Desired ending inventory Q3 = 2,900 + 1,500 - 580

Fill in the calculations to get the number of tents to produce each quarter.

Answer 2

Q1= 9,510

Q2= 7,680

Q3= 3,140

Q4= 3,820

Step-by-step explanation:

Giving the following information:

Expected quarterly unit sales for tents at Sandy’s Camping Gear are 7,500, 8,800, 3,200, and 2,900.

At the start of the current year, the inventory of finished tents on hand is 750 tents. The desired ending inventory of 20 percent of next quarter’s sales.

The production budget for each month has the following structure:

Production budget= sales + ending inventory - beginning inventory

Q1= 7,500 + (8,800*0.20) - 750= 9,510

Q2= 8,800 + (3,200*0.20) - 1,760= 7,680

Q3= 3,200 + (2,900*0.20) - 640= 3,140

Q4= 2,900 + (7,500*0.20) - 580= 3,820