Ruiz Co. provides the following unit sales forecast for the next three months: January February March Sales units 3,000 4,200 5,000 The company wants to end each month with ending finished goods inventory equal to 10% of the next month’s sales. Finished goods inventory on December 31 is 300 units. The budgeted production units for February are:

The budgeted production units for February are: 4280 units

Explanation:

Ruiz Co.

Particulars                           January        February       March

Sales units                            3,000             4,200        5,000

-Opening Inventory               300                 420          500

+Closing Inventory                420                  500                      

Production Budget             3120                4280                      

The budgeted production units for February are: 4280 units

Production is calculated as

Production = Sales + Ending Inventory Less Opening Inventory

The Ending inventory of one month is the opening inventory of the next month.

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