Question

Patrick Inc. makes industrial solvents. In the first 4 months of the coming year, Patrick expects the following unit sales: January 41,000 February 38,000 March 50,000 April 51,000 Patrick's policy is to have 25% of next month's sales in ending inventory. On January 1, it is expected that there will be 6,700 drums of solvent on hand. Required: Prepare a production budget for the first quarter of the year. Show the number of drums that should be produced each month as well as for the quarter in total.

Answer 1

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

January 41,000

February 38,000

March 50,000

April 51,000

Patrick's policy is to have 25% of next month's sales in ending inventory. On January 1, it is expected that there will be 6,700 drums of solvent on hand.

January:

Sales= 41,000

Next month sales= 38,000*0.25= 9,500 units

Initial inventory= 6700 (-)

Total production= 43,800 units

February:

Sales= 38,000

Next month sales= 50,000*0.25= 12,500 units

Initial inventory= 9,500 (-)

Total production= 41,000 units

March:

Sales= 50,000

Next month sales= 51,000*0.25= 12,750 units

Initial inventory= 12,500 (-)

Total production= 50,250 units

April:

Sales= 51,000

Initial inventory= 12,500

Total production= 38,500 units

Total production= 173,550 units