Question
Betz Company's sales budget shows the following projections for next year:
Sales in Units: 1st Quarter = 60,000; 2nd Quarter = 80,000; 3rd Quarter = 45,000; 4th Quarter = 55,000
Inventory at the beginning of the year was 18,000 units. The finished goods inventory at the end of each quarter is to equal 30% of the next quarter's budgeted unit sales. How many units should be produced during the first quarter
Answer:
Production budget = 66,000 units
Step-by-step explanation:
The expected units of a product that a business estimates to manufacture given its sales budget and inventory is known as the production budget.
The production budget can bed determined by adjusting the sales budget for closing and opening inventories.
Production budget = Sales budget +closing inventory - opening inventory
Opening inventory = 18,000
Closing Inventory units = 30% × 2nd quarter budget
Inventory units = 30% × 80,000=
Production budget = 60,000 + 24,000 - 18,000=66,000 units
Production budget = 66,000 units