Atlantic Surf manufactures surfboards. The company's budgeted sales units for the next three months is shown below. Company policy is to maintain finished goods inventory equal (in units) to 40% of the next month's unit sales. As of June 30, the company has 1,760 finished surfboards in inventory. July 4,400 August 6,800 September 2,900 Budgeted sales units Prepare the production budget for the months of July and August. ATLANTIC SURF Production Budget July August Budgeted sales units Add: Desired ending inventory 4,400 6,800 Next period budgeted sales units 2,640 4,080 Ratio of inventory to future sales 40% 40% Desired ending inventory units 1,056 1,632 Total required units 5,456 8,432 Less: Beginning inventory units 5,040 1,760 4,400 Units to be produced 6,800 Zahn Company budgets sales of 260 units in May and 440 units in June. Each month's ending inventory should be 25% of the next month's sales. The April 30 ending finished goods inventory is 65 units. Prepare the production budget for May. ZAHN COMPANY Production Budget May Budgeted sales units 260 Add: Desired ending inventory Next period budgeted sales units 195 Ratio of inventory to future sales 25% Desired ending inventory units (110) Total required units Less: Beginning inventory units 440 Units to produce 65
Atlantic Surf manufactures surfboards. The company's budgeted sales units for the next three months is shown below. Company policy is to maintain finished goods inventory equal (in units) to 40% of the next month's unit sales. As of June 30, the company has 1,760 finished surfboards in inventory. July 4,400 August 6,800 September 2,900 Budgeted sales units Prepare the production budget for the months of July and August. ATLANTIC SURF Production Budget July August Budgeted sales units Add: Desired ending inventory 4,400 6,800 Next period budgeted sales units 2,640 4,080 Ratio of inventory to future sales 40% 40% Desired ending inventory units 1,056 1,632 Total required units 5,456 8,432 Less: Beginning inventory units 5,040 1,760 4,400 Units to be produced 6,800 Zahn Company budgets sales of 260 units in May and 440 units in June. Each month's ending inventory should be 25% of the next month's sales. The April 30 ending finished goods inventory is 65 units. Prepare the production budget for May. ZAHN COMPANY Production Budget May Budgeted sales units 260 Add: Desired ending inventory Next period budgeted sales units 195 Ratio of inventory to future sales 25% Desired ending inventory units (110) Total required units Less: Beginning inventory units 440 Units to produce 65
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:Atlantic Surf manufactures surfboards. The company's budgeted sales units for the next three months is shown below. Company policy
is to maintain finished goods inventory equal (in units) to 40% of the next month's unit sales. As of June 30, the company has 1,760
finished surfboards in inventory.
July
4,400
August
6,800
September
2,900
Budgeted sales units
Prepare the production budget for the months of July and August.
ATLANTIC SURF
Production Budget
July
August
4,400
6,800
Budgeted sales units
Add: Desired ending inventory
4,080
2,640
40%
Next period budgeted sales units
Ratio of inventory to future sales
40%
Desired ending inventory units
1,056
1,632
Total required units
5,456
8,432
Less: Beginning inventory units
1,760
4,400
5,040
Units to be produced
6,800
Zahn Company budgets sales of 260 units in May and 440 units in June. Each month's ending inventory should be 25% of the next
month's sales. The April 30 ending finished goods inventory is 65 units. Prepare the production budget for May.
ZAHN COMPANY
Production Budget
May
Budgeted sales units
Add: Desired ending inventory
260
Next period budgeted sales units
195
Ratio of inventory to future sales
25%
Desired ending inventory units
(110)
Total required units
Less: Beginning inventory units
440
Units to produce
65
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