Chapter 9, Problem 9.20AE

Production budget (Learning Objective 2)

Hoffman Foods produces specialty soup sold in jars. The projected sales in dollars and jars for each quarter of the upcoming year are as follows:

	Total sales revenue	Number of jars sold
1st quarter	$181,000	152,500
2nd quarter	$219,000	181,500
3rd quarter	$255,000	213,000
4th quarter	$199,000	160,500

Hoffman anticipates selling 223,000 jars with total sales revenue of $260,000 in the first quarter of the year following the year given in the preceding table. Hoffman has a policy that the ending inventory of jars must be 30% of the following quarter’s sales. Prepare a production budget for the year that shows the number of jars to be produced each quarter and for the year in total.