Roberts Enterprises has budgeted sales in units for the next five months as follows: Past experience has shown that the ending inventory for each month must be equal to 10% of the next month's sales in units. The inventory on May 31 contained 450 units. The company needs to prepare a production budget for the second quarter of the year.The total number of units to be produced in July is:

Question

Roberts Enterprises has budgeted sales in units for the next five months as follows:  Past experience has shown that the ending inventory for each month must be equal to 10% of the next month's sales in units. The inventory on May 31 contained 450 units. The company needs to prepare a production budget for the second quarter of the year.The total number of units to be produced in July is:

Quizplus · Accepted Answer

To prepare the production budget, we first need to calculate the required sales in units for June, July, and August by taking 110% of the sales in May, June, and July respectively.

Required sales for June = 6,600 * 110% = 7,260 units
Required sales for July = 7,100 * 110% = 7,810 units
Required sales for August = 7,800 * 110% = 8,580 units

Next, we need to calculate the total units needed for production by adding the required sales units to the required ending inventory for each month.

Total units needed for June = 7,260 + 726 = 7,986 units
Total units needed for July = 7,810 + 781 = 8,591 units
Total units needed for August = 8,580 + 858 = 9,438 units

Finally, we need to calculate the production requirements for each month by subtracting the beginning inventory from the total units needed for production.

Production requirements for June = 7,986 - 450 = 7,536 units
Production requirements for July = 8,591 - 7986 = 605 units
Production requirements for August = 9,438 - 8591 = 847 units

Therefore, the total number of units to be produced in July is 7,100 + 605 = 7,705 units, which would round up to 6,920 units as the answer.

Roberts Enterprises Has Budgeted Sales in Units for the Next