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Patrick Inc. makes industrial solvents. In the first 4 months of the coming year, Patrick expects...

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Accounting

Patrick Inc. makes industrial solvents. In the first 4 months ofthe coming year, Patrick expects the following unit sales:

January41,000
February38,000
March50,000
April51,000

Patrick's policy is to have 23% of next month's sales in endinginventory. On January 1, it is expected that there will be 4,500drums of solvent on hand.

Required:

Prepare a production budget for the first quarter of the year.Show the number of drums that should be produced each month as wellas for the quarter in total. If required, round your answers to thenearest whole unit.

Patrick Inc.
Production Budget
For the Coming Quarter
JanuaryFebruaryMarch1st Quarter Total
Sales
Desired ending inventory
Total needs
Less: Beginning inventory
Units to be produced

Answer & Explanation Solved by verified expert
4.2 Ratings (869 Votes)

January February March 1st Quarter Total
Sales                      (a) $41,000 $38,000 $50,000 $129,000
Ending Inventory $8,740 $11,500 $11,730 $31,970
(38000*23%) (50000*23%) (51000*23%)
Patrick Inc
Production Budget
For the coming Quarter
January February March 1st Quarter Total
Sales                      (a) $41,000 $38,000 $50,000 $129,000
Desired Ending Inventory (b) $8,740 $11,500 $11,730 $31,970
Total Needs © = (a+b) $49,740 $49,500 $61,730 $160,970
Less: Beginning Inventory (d) $4,500 $8,740 $11,500 $24,740
Units to be produced ( c) - (d) $45,240 $40,760 $50,230 $136,230

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