**Preparing a Production Budget** 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 in stock. **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. --- **Patrick Inc. Production Budget** *For the Coming Quarter* | | January | February | March | 1st Quarter Total | |-------------------|---------|----------|--------|-------------------| | Sales | 41,000 | 38,000 | 50,000 | 129,000 | | Desired ending inventory | 9,500 | 12,500 | 12,750 | 32,250 | | **Total needs** | 50,500 | 50,500 | 62,750 | 163,250 | | Less: Beginning inventory | 6,700 | 9,500 | 12,500 | 6,700 | | **Units to be produced** | 43,800 | 39,675 | 50,250 | 130,675 | This table outlines the production needs based on expected sales and desired inventory levels, ensuring a buffer by maintaining a specific percentage of the following month's projected sales as ending inventory.
**Preparing a Production Budget** 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 in stock. **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. --- **Patrick Inc. Production Budget** *For the Coming Quarter* | | January | February | March | 1st Quarter Total | |-------------------|---------|----------|--------|-------------------| | Sales | 41,000 | 38,000 | 50,000 | 129,000 | | Desired ending inventory | 9,500 | 12,500 | 12,750 | 32,250 | | **Total needs** | 50,500 | 50,500 | 62,750 | 163,250 | | Less: Beginning inventory | 6,700 | 9,500 | 12,500 | 6,700 | | **Units to be produced** | 43,800 | 39,675 | 50,250 | 130,675 | This table outlines the production needs based on expected sales and desired inventory levels, ensuring a buffer by maintaining a specific percentage of the following month's projected sales as ending inventory.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:**Preparing a Production Budget**
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 in stock.
**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.
---
**Patrick Inc. Production Budget**
*For the Coming Quarter*
| | January | February | March | 1st Quarter Total |
|-------------------|---------|----------|--------|-------------------|
| Sales | 41,000 | 38,000 | 50,000 | 129,000 |
| Desired ending inventory | 9,500 | 12,500 | 12,750 | 32,250 |
| **Total needs** | 50,500 | 50,500 | 62,750 | 163,250 |
| Less: Beginning inventory | 6,700 | 9,500 | 12,500 | 6,700 |
| **Units to be produced** | 43,800 | 39,675 | 50,250 | 130,675 |
This table outlines the production needs based on expected sales and desired inventory levels, ensuring a buffer by maintaining a specific percentage of the following month's projected sales as ending inventory.
Expert Solution
Step 1
Production budget:
In this budget it tells about the number of units to be produced in a period of time according to the sales and ending inventory.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education