Question

Shocker corporation's sales budget shows quarterly sales for the next year as follows: unit sales quarter 1 10,000 units quarter 2 8,000 units quarter 3 12,000 units quarter 4 14,000 units corporation policy is to have a finished goods inventory at the end of each quarter equal to 20% of the next quarter's sales. budgeted production for the second quarter of the next year would be:

Answer 1

Budgeted production for Q2 would be 8,800 units.

Step-by-step explanation:

For Q2, sales for the quarter is 8,000 units .

The ending inventory is 20% of Q3.

Since sales for Q3 is 12000units,

20% × 12,000 =2,400 units

Total requirement is therefore 8000 units + 2,400 units = 10,400 units

The beginning inventory is 20% of Q2

Since sales for Q2 is 8,000 units,

20% × 8000 = (1,600) units

Budgeted Production for Q2 is therefore 8,800 units . I.e 10,400 units - 1,600 units