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.

Question

Paul Mcpherson

Business

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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Heidi May · Answer 1

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