A sales budget is given below for one of the products manufactured by Dance, Ltd.
The inventory of finished goods at the end of each month must be equal to 5,000 units plus 10% of the next month's sales. On June 30, the finished goods inventory totaled 6,800 units.
Each unit of product requires three ounces of a special liquid extract known as SV-6. Sometimes the extract is in short supply; for this reason, the company has a policy of maintaining an inventory at the end of each month equal to one half of the next month's production needs. This requirement was met on July 1 of the current year.
Required:
Prepare a budget showing the quantity of SV-6 to be purchased for September.
Correct Answer:
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