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2 October, 20:56

Grantham Manufacturing Company makes oak rocking chairs. Budgeted sales are 21,500 for July, 24,300 for August, 28,700 for September and 28,900 for October. Grantham maintains an ending inventory equal to 10% of the current month's sales. Ending inventory at June 30th was 3,100. Prepare a production budget for the 3rd quarter ending September 30.

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  1. 2 October, 21:26
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    Instructions are below.

    Explanation:

    Giving the following information:

    Budgeted sales:

    July = 21,500

    August = 24,300

    September = 28,700

    October = 28,900

    Grantham maintains an ending inventory equal to 10% of the current month's sales. The ending inventory at June 30th was 3,100.

    Production budget = sales for the month + desired inventory - beginning inventory

    July:

    Sales = 21,500

    Ending inventory = (24,300*0.10) = 2,430

    Beginning inventory = (3,100)

    Total = 20,830

    August:

    Sales = 24,300

    Ending inventory = (28,700*0.10) = 2,870

    Beginning inventory = (2,430)

    Total = 24,740

    September:

    Sales = 28,700

    Ending inventory = (28,900*0.10) = 2,890

    Beginning inventory = (2,870)

    Total = 28,720
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