Production Budget Aqua-pro Inc. produces submersible water pumps for ponds and cisterns. The unit sales for selected months of the year are as follows: Unit Sales April 207,000 May 253,000 June 230,000 July 276,000 Company policy requires that ending inventories for each month be 25% of next month's sales. However, at the beginning of April, due to greater sales in March than anticipated, the beginning inventory of water pumps is only 21,000. Required: Prepare a production budget for the second quarter of the year. Show the number of units that should be produced each month as well as for the quarter in total. Aqua-pro Inc. Production Budget For the Second Quarter April May June Total Sales fill in the blank 1 fill in the blank 2 fill in the blank 3 fill in the blank 4 Desired ending inventory fill in the blank 5 fill in the blank 6 fill in the blank 7 fill in the blank 8 Total needs fill in the blank 9 fill in the blank 10 fill in the blank 11 fill in the blank 12 Less: Beginning inventory fill in the blank 13 fill in the blank 14 fill in the blank 15 fill in the blank 16 Units produced fill in the blank 17 fill in the blank 18
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.
Production Budget
Aqua-pro Inc. produces submersible water pumps for ponds and cisterns. The unit sales for selected months of the year are as follows:
| Unit Sales | |
| April | 207,000 |
| May | 253,000 |
| June | 230,000 |
| July | 276,000 |
Company policy requires that ending inventories for each month be 25% of next month's sales. However, at the beginning of April, due to greater sales in March than anticipated, the beginning inventory of water pumps is only 21,000.
Required:
Prepare a production budget for the second quarter of the year. Show the number of units that should be produced each month as well as for the quarter in total.
| Aqua-pro Inc. | ||||
| Production Budget | ||||
| For the Second Quarter | ||||
| April | May | June | Total | |
| Sales | fill in the blank 1 | fill in the blank 2 | fill in the blank 3 | fill in the blank 4 |
| Desired ending inventory | fill in the blank 5 | fill in the blank 6 | fill in the blank 7 | fill in the blank 8 |
| Total needs | fill in the blank 9 | fill in the blank 10 | fill in the blank 11 | fill in the blank 12 |
| Less: Beginning inventory | fill in the blank 13 | fill in the blank 14 | fill in the blank 15 | fill in the blank 16 |
| Units produced | fill in the blank 17 | fill in the blank 18 |
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