Palmgren Company produces consumer products. The sales budget for four months of the year is presented below. Unit Sales Dollar Sales July 32,500 $970,000 August 34,500 1,062,200 September 40,500 1,206,000 October 36,000 1,141,300 Company policy requires that ending inventories for each month be 25 percent of next month’s sales. At the beginning of July, the beginning inventory of consumer products met that policy. Required: Prepare a production budget for the third quarter of the year. Show the number of units that should be produced each month as well as for the quarter in total.
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.
Palmgren Company produces consumer products. The sales budget for four months of the year is presented below.
| Unit Sales | Dollar Sales | |
| July | 32,500 | $970,000 |
| August | 34,500 | 1,062,200 |
| September | 40,500 | 1,206,000 |
| October | 36,000 | 1,141,300 |
Company policy requires that ending inventories for each month be 25 percent of next month’s sales. At the beginning of July, the beginning inventory of consumer products met that policy.
Required:
Prepare a production budget for the third quarter of the year. Show the number of units that should be produced each month as well as for the quarter in total.
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