Down Under Products, Limited of Australia has budgeted sales of its popular boomerang for the next four months as follows: April May June July Unit Sales 62,000 80,000 102,000 86,000 The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of- month inventory levels must equal 10% of the following month's unit sales. The inventory at the end of March was 6,200 units. Required: Prepare a production budget by month and in total, for the second quarter. Answer is complete but not entirely correct. Down Under Products, Limited Production Budget April Budgeted unit sales Add: Desired units of ending finished goods inventory Total needs Less: Units of beginning finished goods inventory Required production in units >> > 62,000 ✓ 8,000✔ 70,000 6,200 63,800 May 80,000✔ 10,200✔ 90,200 8,000✔ 82,200 June 102,000 ✓ 8,600✔ 110,600 10,200✔ 100,400 Quarter 244,000✔ 26,800 270,800 24,400 X 246,400
Down Under Products, Limited of Australia has budgeted sales of its popular boomerang for the next four months as follows: April May June July Unit Sales 62,000 80,000 102,000 86,000 The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of- month inventory levels must equal 10% of the following month's unit sales. The inventory at the end of March was 6,200 units. Required: Prepare a production budget by month and in total, for the second quarter. Answer is complete but not entirely correct. Down Under Products, Limited Production Budget April Budgeted unit sales Add: Desired units of ending finished goods inventory Total needs Less: Units of beginning finished goods inventory Required production in units >> > 62,000 ✓ 8,000✔ 70,000 6,200 63,800 May 80,000✔ 10,200✔ 90,200 8,000✔ 82,200 June 102,000 ✓ 8,600✔ 110,600 10,200✔ 100,400 Quarter 244,000✔ 26,800 270,800 24,400 X 246,400
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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:Down Under Products, Limited of Australia has budgeted sales of its popular boomerang for the next four months as follows:
April
May
June
July
Unit Sales
62,000
80,000
102,000
86,000
The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-
month inventory levels must equal 10% of the following month's unit sales. The inventory at the end of March was 6,200 units.
Required:
Prepare a production budget by month and in total, for the second quarter.
X Answer is complete but not entirely correct.
Down Under Products, Limited
Production Budget
Budgeted unit sales
Add: Desired units of ending finished goods inventory
Total needs
Less: Units of beginning finished goods inventory
Required production in units
April
62,000
8,000
70,000
6,200
63,800
May
80,000
10,200
90,200
8,000
82,200
June
102,000
8,600
110,600
10,200
100,400
Quarter
244,000
26,800 X
270,800
24,400 X
246,400
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