### Ruiz Company Production Budget OverviewRuiz Company plans its production based on projected sales and inventory requirements for the upcoming months. This budget outlines the strategy for meeting sales targets while maintaining optimal inventory levels.**Budgeted Sales Units (Next Four Months)**- April: 680 units- May: 760 units- June: 710 units- July: 800 unitsThe company aims to end each month with a finished goods inventory equal to 30% of the following month's budgeted sales units. As of April 1, the starting finished goods inventory is 204 units.**Production Budget Calculation (For April, May, and June):**#### April:- **Next Period’s Budgeted Sales Units (May):** 760 units- **Ratio of Inventory to Future Sales:** 30%- **Computation Steps:** - Desired ending inventory for April = 30% of May's sales = 0.30 * 760 = 228 units - Total required units for April = April sales + Desired ending inventory - Beginning inventory - Units to produce = Total required units - April’s beginning inventory#### May:- **Next Period’s Budgeted Sales Units (June):** 710 units- **Ratio of Inventory to Future Sales:** 30%- **Computation Steps:** - Desired ending inventory for May = 30% of June's sales = 0.30 * 710 = 213 units - Total required units for May = May sales + Desired ending inventory - Ending inventory of April - Units to produce = Total required units - Ending inventory from April#### June:- **Next Period’s Budgeted Sales Units (July):** 800 units- **Ratio of Inventory to Future Sales:** 30%- **Computation Steps:** - Desired ending inventory for June = 30% of July's sales = 0.30 * 800 = 240 units - Total required units for June = June sales + Desired ending inventory - Ending inventory of May - Units to produce = Total required units - Ending inventory from MayThis strategic approach ensures Ruiz Company can meet sales forecasts while efficiently managing inventory levels to reduce carrying costs and maximize efficiency.

Given inventory required = 30% of budgeted next month sales units. Units required = Current sales +…

Ruiz Company provides the following budgeted sales for the next four months. The company wants to end each month with ending finished goods inventory equal to 30% of next month's budgeted unit sales. Finished goods inventory on April 1 is 204 units. Prepare a production budget for the months of April, May, and June.

Ruiz Company provides the following budgeted sales for the next four months. The company wants to end each month with ending finished goods inventory equal to 30% of next month's budgeted unit sales. Finished goods inventory on April 1 is 204 units. Prepare a production budget for the months of April, May, and June.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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