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
Explanation:
<em>The expected units of a product that a business estimates to manufacture given its sales budget and inventory is known as the production budget.
</em>
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
