Roberts Enterprises has budgeted sales in units for the next five months as follows:$\begin{array} {| l | r | }
\hline \text { June } & 4,500 \text { units } \
\hline \text { July } & 7,100 \text { units } \
\hline \text { August } & 5,300 \text { units } \
\hline \text { September } & 6,700 \text { units } \
\hline \text { October } & 3,700 \text { units } \
\hline
\end{array}$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 410 units. The company needs to prepare a production budget for the second quarter of the year.

-What is the total number of units to be produced in July?

Question

Roberts Enterprises has budgeted sales in units for the next five months as follows:$\begin{array} {| l | r | } 
\hline \text { June } & 4,500 \text { units } \
\hline \text { July } & 7,100 \text { units } \
\hline \text { August } & 5,300 \text { units } \
\hline \text { September } & 6,700 \text { units } \
\hline \text { October } & 3,700 \text { units } \
\hline
\end{array}$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 410 units. The company needs to prepare a production budget for the second quarter of the year.

-What is the total number of units to be produced in July?

Quizplus · Accepted Answer

To calculate the total number of units to be produced in July, we need to consider the desired ending inventory for July (which is 10% of August's sales) and the beginning inventory for July (which is the ending inventory of June). - July's sales are budgeted at 7,100 units.- August's sales are budgeted at 5,300 units, so 10% of this is 530 units, which is the desired ending inventory for July.- The ending inventory for June (which becomes July's beginning inventory) is 10% of July's sales, which is 710 units (10% of 7,100 units).The formula for the production budget is: $$ \text{Required production} = \text{Budgeted sales} + \text{Desired ending inventory} - \text{Beginning inventory} $$So for July:$$ \text{Required production} = 7,100 + 530 - 710 = 6,920 \text{ units} $$

Roberts Enterprises Has Budgeted Sales in Units for the Next