Production Budget Assume that Stillwater Designs produces two automotive subwoofers: S12L7 and S12L5. The S12L7 sells for $475, and the S12L5 sells for $300. Projected sales (number of speakers) for the coming five quarters are as follows: S12L7 S12L5 First quarter, 20Y1 840 1,365 Second quarter, 20Y1 2,310 1,470 Third quarter, 20Y1 5,880 5,565 Fourth quarter, 20Y1 4,830 4,095 First quarter, 20Y2 945 1,260 The vice president of sales believes that the projected sales are realistic and can be achieved by the company. Stillwater Designs needs a production budget for each product (representing the amount that must be outsourced to manufacturers located in Asia). Beginning inventory of S12L7 for the first qua
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.
Production Budget
Assume that Stillwater Designs produces two automotive subwoofers: S12L7 and S12L5. The S12L7 sells for $475, and the S12L5 sells for $300. Projected sales (number of speakers) for the coming five quarters are as follows:
| S12L7 | S12L5 | ||
| First quarter, 20Y1 | 840 | 1,365 | |
| Second quarter, 20Y1 | 2,310 | 1,470 | |
| Third quarter, 20Y1 | 5,880 | 5,565 | |
| Fourth quarter, 20Y1 | 4,830 | 4,095 | |
| First quarter, 20Y2 | 945 | 1,260 |
The vice president of sales believes that the projected sales are realistic and can be achieved by the company.
Stillwater Designs needs a production budget for each product (representing the amount that must be outsourced to manufacturers located in Asia). Beginning inventory of S12L7 for the first quarter of 20Y1 was 340 boxes. The company's policy is to have 20% of the next quarter's sales of S12L7 in ending inventory. Beginning inventory of S12L5 was 170 boxes. The company's policy is to have 30% of the next quarter's sales of S12L5 in ending inventory.
Required:
Prepare a production budget for each quarter for 20Y1 and for the year in total.
| 1st Qtr. | 2nd Qtr. | 3rd Qtr. | 4th Qtr. | Year | |
| Sales | fill in the blank b777f40c3fc2fdb_1 | fill in the blank b777f40c3fc2fdb_2 | fill in the blank b777f40c3fc2fdb_3 | fill in the blank b777f40c3fc2fdb_4 | fill in the blank b777f40c3fc2fdb_5 |
| Desired ending inventory | fill in the blank b777f40c3fc2fdb_6 | fill in the blank b777f40c3fc2fdb_7 | fill in the blank b777f40c3fc2fdb_8 | fill in the blank b777f40c3fc2fdb_9 | fill in the blank b777f40c3fc2fdb_10 |
| Total needs | fill in the blank b777f40c3fc2fdb_11 | fill in the blank b777f40c3fc2fdb_12 | fill in the blank b777f40c3fc2fdb_13 | fill in the blank b777f40c3fc2fdb_14 | fill in the blank b777f40c3fc2fdb_15 |
| Less: Beginning inventory | fill in the blank b777f40c3fc2fdb_16 | fill in the blank b777f40c3fc2fdb_17 | fill in the blank b777f40c3fc2fdb_18 | fill in the blank b777f40c3fc2fdb_19 | fill in the blank b777f40c3fc2fdb_20 |
| Units produced | fill in the blank b777f40c3fc2fdb_21 | fill in the blank b777f40c3fc2fdb_22 | fill in the blank b777f40c3fc2fdb_23 | fill in the blank b777f40c3fc2fdb_24 | fill in the blank b777f40c3fc2fdb_25 |
Prepare a production budget for each quarter for 20Y1 and for the year in total. If required, round your answers to nearest whole value.
| 1st Qtr. | 2nd Qtr. | 3rd Qtr. | 4th Qtr. | Year | |
| Sales | fill in the blank d07f62f36ff7018_1 | fill in the blank d07f62f36ff7018_2 | fill in the blank d07f62f36ff7018_3 | fill in the blank d07f62f36ff7018_4 | fill in the blank d07f62f36ff7018_5 |
| Desired ending inventory | fill in the blank d07f62f36ff7018_6 | fill in the blank d07f62f36ff7018_7 | fill in the blank d07f62f36ff7018_8 | fill in the blank d07f62f36ff7018_9 | fill in the blank d07f62f36ff7018_10 |
| Total needs | fill in the blank d07f62f36ff7018_11 | fill in the blank d07f62f36ff7018_12 | fill in the blank d07f62f36ff7018_13 | fill in the blank d07f62f36ff7018_14 | fill in the blank d07f62f36ff7018_15 |
| Less: Beginning inventory | fill in the blank d07f62f36ff7018_16 | fill in the blank d07f62f36ff7018_17 | fill in the blank d07f62f36ff7018_18 | fill in the blank d07f62f36ff7018_19 | fill in the blank d07f62f36ff7018_20 |
| Units produced | fill in the blank d07f62f36ff7018_21 | fill in the blank d07f62f36ff7018_22 | fill in the blank d07f62f36ff7018_23 | fill in the blank d07f62f36ff7018_24 | fill in the blank d07f62f36ff7018_25 |
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