Robyn Company produces and sells automobile batteries. The sales forecast for 2019 is as follows:
Quarter Batteries (in units)
1 5,000
2 7,000
3 8,000
4 10,000
The January 1, 2019 inventory of batteries is forecasted to be 2,000 units. Management desires an ending inventory each quarter equal to 40% of the next quarter's sales.
Required:
a) What are the budgeted units to produce for the second quarter of 2019?

Total= 7,400 units

Explanation:

Giving the following information:

Quarter Batteries (in units)

1 5,000

2 7,000

3 8,000

4 10,000

Management desires an ending inventory each quarter equal to 40% of the next quarter's sales.

To calculate the production for the second quarter, we need to use the following formula:

Production= sales + desired ending inventory - beginning inventory

2nd Quarter (in units):

Sales= 7,000

Desired ending inventory= (8,000*0.4)= 3,200

Beginning inventory= (7,000*0.4)= (2,800)

Total= 7,400 units

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