Modesto Company produces and sells Product AlphaB.To guard against stockouts,the company requires that 20% of the next month's sales be on hand at the end of each month.Budgeted sales of Product AlphaB over the next four months are: Budgeted production units for August will be:

Question

Modesto Company produces and sells Product AlphaB.To guard against stockouts,the company requires that 20% of the next month's sales be on hand at the end of each month.Budgeted sales of Product AlphaB over the next four months are:  Budgeted production units for August will be:

Quizplus · Accepted Answer

To determine the budgeted production units for August, we need to first calculate the required ending inventory for each month.

For September: 20% x 60,000 = 12,000 
For October: 20% x 75,000 = 15,000 
For November: 20% x 90,000 = 18,000

Next, we add the required ending inventory to the budgeted sales for each month to get the total units needed:

For August: 50,000 + 20% x 60,000 = 62,000 
For September: 60,000 + 12,000 + 20% x 75,000 = 84,000 
For October: 75,000 + 15,000 + 20% x 90,000 = 108,000 
For November: 90,000 + 18,000 = 108,000

Therefore, the budgeted production units for August will be 58,000 (the total units needed for August minus the beginning inventory of 4,000 units).

Modesto Company Produces and Sells Product AlphaB