Question

Question 6 Paige Company estimates that unit sales will be 11,100 in quarter 1, 12,300 in quarter 2, 14,500 in quarter 3, and 18,700 in quarter 4. Management desires to have an ending finished goods inventory equal to 22% of the next quarter’s expected unit sales. Prepare a production budget by quarters for the first 6 months of 2020.

Answer 1

Answer:

$18,250

Explanation:

Preparation of a production budget by quarters for the first 6 months of 2020.

Paige Company

Production Budget For the six months ended December 31, 2020

Expected unit sales 11,100 12,300

Add: Desired ending finished goods

2,706 2,706

(22%*$12,300)

Total required units 13,806 15,006

(11,100+2,706) (12,300+2,706)

Less: Beginning finished goods inventory

2,442 2,706

(22%*11,100) (22%*12,300)

Required production units 8,656 9,594

(11,100-2,442) (12,300+2,706)

Six Months: $18,250

(8,656 +9,594)

Therefore the production budget by quarters for the first 6 months of 2020 will be $18,250