LWJ Ltd managers are preparing a production budget for the month of August 20X1. The sales budget for the month is 6500 units. Sales for September 20X1 are budgeted at 8760 units. The company's policy is to hold closing stock of finished goods at 70% of the next following month's sales levels. What is the production budget in units for August 20X6?

Question

Quizplus · Accepted Answer

The correct answer is A.The production budget for August 20X1 is 8082 units. This is calculated as follows:Budgeted sales for September 20X1 = 8760 unitsClosing stock of finished goods at 70% of September sales = 8760 units x 70% = 6132 unitsProduction budget for August 20X1 = Budgeted sales for August 20X1 + Closing stock of finished goods at 70% of September sales= 6500 units + 6132 units= 8082 units

LWJ Ltd Managers Are Preparing a Production Budget for the Month