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 24% of next month's sales in ending inventory. On January 1, it is expected that there will be 4,350 drums of solvent on hand. 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. If required, round your answers to the nearest whole unit. Patrick Inc. Production Budget For the Coming Quarter January February March 1st Quarter Total Sales fill in the blank 1 fill in the blank 2 fill in the blank 3 fill in the blank 4 Desired ending inventory fill in the blank 5 fill in the blank 6 fill in the blank 7 fill in the blank 8 Total needs fill in the blank 9 fill in the blank 10 fill in the blank 11 fill in the blank 12 Less: Beginning inventory fill in the blank 13 fill in the blank 14 fill in the blank 15 fill in the blank 16 Units to be produced fill in the blank 17 fill in the blank 18 fill in the blank 19 fill in the blank 20
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.
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 24% of next month's sales in ending inventory. On January 1, it is expected that there will be 4,350 drums of solvent on hand.
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. If required, round your answers to the nearest whole unit.
| Patrick Inc. | ||||
| Production Budget | ||||
| For the Coming Quarter | ||||
| January | February | March | 1st Quarter Total | |
| Sales | fill in the blank 1 | fill in the blank 2 | fill in the blank 3 | fill in the blank 4 |
| Desired ending inventory | fill in the blank 5 | fill in the blank 6 | fill in the blank 7 | fill in the blank 8 |
| Total needs | fill in the blank 9 | fill in the blank 10 | fill in the blank 11 | fill in the blank 12 |
| Less: Beginning inventory | fill in the blank 13 | fill in the blank 14 | fill in the blank 15 | fill in the blank 16 |
| Units to be produced | fill in the blank 17 | fill in the blank 18 | fill in the blank 19 | fill in the blank 20 |
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