Question

The Ralston Company manufactures a special line of graphic tubing items. The company estimates it will sell 87,000 units of this item in 2020. The beginning finished goods inventory contains 32,000 units. The target for each year's ending inventory is 22,000 units. Each unit requires five feet of plastic tubing. The tubing inventory currently includes 88,000 feet of the required tubing. Materials on hand are targeted to equal 3 months' production. Any shortage in materials will be made up by the immediate purchase of materials. Sales take place evenly throughout the year. What is the production budget (in units) for 2020

Answer 1

Answer:Production budget for 2020 =77,000 units

Explanation:

Production budget also referred to as manufacturing budget tells a business  the expected units needed to  be produced which depends on the sales budget in the inventories ( both closing and opening) so as to meet customers demand.  

Units produced =  Projected sales +  desired ending inventory –  beginning inventory

Units Produced/ Production budget for 2020 =87,000  +  22,000 - 32,000  

= 77,000 units

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