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.

Question

Alessandro Ramirez

Business

1 May, 04:41

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.

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Jackrabbit · Answer 1

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