Prepare a Purchases and Production Budget
I would like to know how I can setup a production budget for January, February and March. What is the purchases budget in dollars for the month January, February.
I have the following sales estimations:
Month Sales
January 45,000
February 60,000
March 90,000
April 93,000
Currently I have 10,000 units of finished goods in inventory (01/01). The inventory of finished goods should be equal to 1/3 of the sales for the next month.
The materials inventory 01/01 are 5.5 million pounds.
For each unit produced I need 4 hundred pounds of material (1 pound = $10). The inventory levels for materials should be equal to one-fourth of the needs for the next month.
How can I calculate the budgets and what would be the results?
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Solution Summary
The solution prepares a purchases and production budget for the months of January and February.