Robyn Company produces and sells automobile batteries. The sales forecast for 2019 is as follows:

Quarter Batteries (in units)

1 5,000

2 7,000

3 8,000

4 10,000

The January 1, 2019 inventory of batteries is forecasted to be 2,000 units. Management desires an ending inventory each quarter equal to 40% of the next quarter's sales.

Required:

a) What are the budgeted units to produce for the second quarter of 2019?

Total = 7,400 units

Explanation:

Giving the following information:

Quarter Batteries (in units)

1 5,000

2 7,000

3 8,000

4 10,000

Management desires an ending inventory each quarter equal to 40% of the next quarter's sales.

To calculate the production for the second quarter, we need to use the following formula:

Production = sales + desired ending inventory - beginning inventory

2nd Quarter (in units):

Sales = 7,000

Desired ending inventory = (8,000*0.4) = 3,200

Beginning inventory = (7,000*0.4) = (2,800)

Total = 7,400 units