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 153 units. Prepare a production budget for the months of April, May, and June.**Budgeted Sales Units:**- **April:** 510- **May:** 590- **June:** 540- **July:** 630**RUIZ COMPANY****Production Budget**| | **April** | **May** | **June** ||-------|-------|------|------|| **Budgeted sales units** | | | || **Add: Desired ending inventory** | | | || Next period budgeted sales units | 590 | 540 | 630 || Ratio of inventory to future sales | 30% | 30% | 30% || **Total required units** | | | || **Less: Budgeted beginning inventory units** | | | || **Units to produce** | | | |**Explanation:** The production budget is a plan that predicts how many units need to be produced in each month based on the sales forecast and inventory requirements. - **Desired Ending Inventory:** This is calculated as 30% of the next month’s sales units.- **Total Required Units:** The sum of the budgeted sales units and the desired ending inventory.- **Units to Produce:** Total required units minus the budgeted beginning inventory.This tool helps ensure that there are enough products to meet demand while managing inventory levels efficiently.

The production budget is prepared to estimate the number of units to be produced during the period.RUIZ Co.Production Budget AprilMayJuneBudgeted sales units 510 590 540Add: Desired ending inventory Next Period budgeted sales units 590 540 630 Ratio of inventory to future sales30%30%30% Desired ending inventory units 177 162 189Total required units 687 752 729Less: Beginning inventory units 153 177 162Units to produced 534 575 567Units to producedApril = 534 unitMay = 575 unitJune = 567 unit

Business

Accounting

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 153 units. Prepare a production budget for the months of April, May, and June. Budgeted sales units. April 510 Budgeted sales units Add: Desired ending inventory Next period budgeted sales units Ratio of inventory to future sales Budgeted beginning inventory units Total required units Units to produce May 590 RUIZ COMPANY Production Budget April June 540 590 30% July 630 May 540 30% June 630 30%

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 153 units. Prepare a production budget for the months of April, May, and June. Budgeted sales units. April 510 Budgeted sales units Add: Desired ending inventory Next period budgeted sales units Ratio of inventory to future sales Budgeted beginning inventory units Total required units Units to produce May 590 RUIZ COMPANY Production Budget April June 540 590 30% July 630 May 540 30% June 630 30%

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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