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andrezito [222]
3 years ago
14

Electro Company manufactures an innovative automobile transmission for electric cars. Management predicts that ending finished g

oods inventory for the first quarter will be 208,500 units. The following unit sales of the transmissions are expected during the rest of the year: second quarter, 417,000 units; third quarter, 469,000 units; and fourth quarter, 289,500 units. Company policy calls for the ending finished goods inventory of a quarter to equal 50% of the next quarter's budgeted sales.
Required:
Prepare a production budget for both the second and third quarters that shows the number of transmissions to manufacture.
Business
1 answer:
snow_tiger [21]3 years ago
4 0

Answer:

Instructions are below.

Explanation:

Giving the following information:

Beginning inventory= 208,500 units.

Sales:

second quarter= 417,000 units

third quarter= 469,000 units

fourth quarter= 289,500 units.

Desired ending inventory= 50% of the next quarter's budgeted sales.

To calculate the production for each quarter, we need to use the following formula:

Production= sales + desired ending inventory - beginning inventory

Second-quarter:

Sales= 417,000

Desired ending inventory= 0.5*469,000= 234,500

Beginning inventory= (208,500)

Total production= 443,000

Third-quarter:

Sales= 469,000

Desired ending inventory= 0.5*289,500= 144,750

Beginning inventory= (234,500)

Total production= 379,250

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