Superior Industries' sales budget shows quarterly sales for the next year as follows: $$\begin{array} { | l | l | }
\hline \text { Quarter } & \text { Sales (units) } \
\hline \text { First } & 10,000 \
\hline \text { Second } & 8,000 \
\hline \text { Third } & 12,000 \
\hline \text { Fourth } & 14,000 \
\hline
\end{array}$$ Company policy is to have a finished goods inventory at the end of each quarter equal to 20% of the next quarter's sales. Budgeted production in units for the second quarter should be:

Question

Superior Industries' sales budget shows quarterly sales for the next year as follows: $$\begin{array} { | l | l | } 
\hline \text { Quarter } & \text { Sales (units) } \
\hline \text { First } & 10,000 \
\hline \text { Second } & 8,000 \
\hline \text { Third } & 12,000 \
\hline \text { Fourth } & 14,000 \
\hline
\end{array}$$ Company policy is to have a finished goods inventory at the end of each quarter equal to 20% of the next quarter's sales. Budgeted production in units for the second quarter should be:

Quizplus · Accepted Answer

To calculate the budgeted production for the second quarter, we need to consider the desired ending inventory for the second quarter and the beginning inventory, which is based on the policy of having an inventory equal to 20% of the next quarter's sales. The desired ending inventory for the second quarter is 20% of the third quarter's sales (12,000 units), which is 2,400 units. The beginning inventory for the second quarter is 20% of the second quarter's sales (8,000 units), which is 1,600 units. The formula to calculate the budgeted production is: Budgeted Sales + Desired Ending Inventory - Beginning Inventory. For the second quarter, it's 8,000 (sales) + 2,400 (desired ending inventory) - 1,600 (beginning inventory) = 8,800 units.

Superior Industries' Sales Budget Shows Quarterly Sales for the Next