Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows: Unit Sales April 80,000 May 90,000 June 120,000 July 95,000 The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month inventory levels must equal 10% of the following month’s unit sales. The inventory at the end of March was 8,000 units. Required: Prepare a production budget by month and in total, for the second quarter.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows:
| Unit Sales | |||
| April | 80,000 | ||
| May | 90,000 | ||
| June | 120,000 | ||
| July | 95,000 | ||
The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month inventory levels must equal 10% of the following month’s unit sales. The inventory at the end of March was 8,000 units.
Required:
Prepare a production budget by month and in total, for the second quarter.
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