One Device makes universal remote controls and expects to sell 500 units in January, 800 in February, 450 in March, 550 in April, and 600 in May. The required ending inventory is 20% of the next month's sales. Prepare a production budget for the first four months of the year. What is the total required production for the year?

Answer and Explanation:

The preparation of the production budget and The total required production for the year is as follows

One Device

Production budget

For the first four months

Particulars Jan Feb Mar April Year

Expected

unit sales 500 units 800 units 450 units 550 units

Add:

Ending

inventory 160 units 90 units 110 units 120 units

($800 * 20%) ($450 * 20%) ($550 * 20%) ($600 * 20%)

Total

required units 660 units 890 units 560 units 670 units

Less:

Beginning

inventory 100 units 160 units 90 units 110 units

($500 * 20%) ($800 * 20%) ($450 * 20%) ($550 * 20%)

Required

production

units 560 units 730 units 470 units 560 units 2,320 units