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Preparing a Production Budget Given Unit Sales Projections

Katherine Company's sales budget has the following unit sales projection for each quarter of the calendar year 2009.

January -March
540,000

April-June
680,000

July-September
490,000

October-December
550,000

Total
2,260,000

Sales for the first quarter of 2010 are expected to be 600,000 units. Ending inventory of finished goods for each quarter is scheduled to equal 5 percent of the next quarter's budgeted sales. The company is expected to be in compliance with this policy as of December 31, 2008. Develop a quarterly production budget for 2009 and for the year in total.

- Prepare the beginning inventory for the first quarter

- Prepare the budgeted beginning inventory for the second - fourth quarters

- Prepare the budgeted production for each quarter

- Prepare the budgeted production for the year

Solution Preview

Please see the attachment for the production budget pertaining to this solution.

Prepare the beginning inventory for the first quarter:
The beginning inventory for the first quarter would be the ending inventory of 4th ...

Solution Summary

This solution describes how to prepare a production budget for the different time frames given in this scenario. In an attached Word document the production budget is formatted.

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