Preparing a Production Budget Tulum Inc. makes a Mexican chocolate mix. In the first 4 months of the coming year, Tulum expects the following unit sales: January 22,000 February 20,000 March 30,000 April 31,000 Tulum's policy is to have 20% of next month's sales in ending inventory. On January 1, it is expected that there will be 1,300 boxes of the chocolate mixture on hand. Required: Prepare a production budget for the first quarter of the year. Show the boxes that should be produced each month as well as for the quarter in total.

Question

Layne Murillo

Business

8 October, 09:07

Preparing a Production Budget Tulum Inc. makes a Mexican chocolate mix. In the first 4 months of the coming year, Tulum expects the following unit sales: January 22,000 February 20,000 March 30,000 April 31,000 Tulum's policy is to have 20% of next month's sales in ending inventory. On January 1, it is expected that there will be 1,300 boxes of the chocolate mixture on hand. Required: Prepare a production budget for the first quarter of the year. Show the boxes that should be produced each month as well as for the quarter in total.

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Ramon Hampton · Answer 1

The preparation of the production budget for the first quarter of the year is presented below:

Tulum Inc.

Production Budget

For the Coming Quarter

January February March 1st Quarter Total

Sales 22,000 20,000 30,000 72,000

Desired

ending inventory 4,000 6,000 6,200 6,200

(20,000 * 20%) (30,000 * 20%) (31,000 * 20%)

Total needs 26,000 26,000 36,200 78,200

Less:

Beginning inventory 1,300 4,000 6,000 1,300

Units to

be produced 24,700 22,000 30,200 76,900