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1 January, 02:16

Yosko Company expects to sell 2 comma 000 units of finished product in January and 2 comma 150 units in February. The company has 260 units on hand on January 1 and desires to have an ending inventory equal to 40 % of the next month's sales. March sales are expected to be 2 comma 270 units. Prepare Yosko 's production budget for January and February.

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  1. 1 January, 02:44
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    Production budget

    January 2,600 units

    February 2,198 units

    Explanation:

    The sales budget is adjusted for the projected opening and closing inventories unit to arrive at the production budget:

    The production budget can be determined using the formula below

    Production budget = Sales budget + closing inventory - opening inventory

    January production budget

    Sales budget = 2,000 units

    Closing inventory = 40% * February sales = 40% * 2,150

    Opening inventory = 260 units

    Production budget for January = 2000 + (40% * 2,150) - 260 = 2,600 units

    February production budget

    Sales budget = 2,150

    Opening inventory = January closing inventory = 860 units

    Closing inventory = 40% * March sales = 40% * 2,270

    Production budget fro February = 2,150 + (40% * 2,270) - 860 = 2,198 units

    Production budget

    January 2,600 units

    February 2,198 units
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Home » Business » Yosko Company expects to sell 2 comma 000 units of finished product in January and 2 comma 150 units in February. The company has 260 units on hand on January 1 and desires to have an ending inventory equal to 40 % of the next month's sales.
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