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25 May, 08:46

Blue Wave Co. predicts the following unit sales for the coming four months: September, 3,700 units; October, 4,800 units; November, 6,900 units; and December, 7,800 units. The company's policy is to maintain finished goods inventory equal to 60% of the next month's sales. At the end of August, the company had 2,600 finished units on hand. Prepare a prodiction budget for each of the months of September, October, and November.

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  1. 25 May, 11:46
    0
    Instructions are listed below.

    Explanation:

    Giving the following information:

    Sales:

    September = 3,700 units

    October = 4,800 units

    November = 6,900 units

    December = 7,800 units.

    The company's policy is to maintain finished goods inventory equal to 60% of the next month's sales. At the end of August, the company had 2,600 finished units on hand.

    To calculate the production for each month, we need to use the following formula:

    Production = sales + desired ending inventory - beginning inventory

    September:

    Sales = 3,700

    Desired ending inventory = (4,800*0.6) = 2,880

    Beginning inventory = (2,600)

    Total = 3,980

    October:

    Sales = 4,800

    Desired ending inventory = (6,900*0.6) = 4,140

    Beginning inventory = (2,880)

    Total = 6,060

    November:

    Sales = 6,900

    Desired ending inventory = (7,800*0.6) = 4,680

    Beginning inventory = (4,140)

    Total = 7,440
  2. 25 May, 11:58
    0
    Prepare a prediction budget for each of the months of September, October, and November.

    Finished Goods

    60%

    August 2600

    September 2880

    October 4140

    November 4680

    Explanation:

    Finished Goods Sell

    60%

    August 2600

    September 2880 3700

    October 4140 4800

    November 4680 6900

    December 7800
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