The Ralston Company manufactures a special line of graphic tubing items.The company estimates it will sell 75,000 units of this item in 2016.The beginning finished goods inventory contains 20,000 units.The target for each year's ending inventory is 10,000 units.Each unit requires five feet of plastic tubing.The tubing inventory currently includes 70,000 feet of the required tubing.Materials on hand are targeted to equal three months' production.Any shortage in materials will be made up by the immediate purchase of materials.Sales take place evenly throughout the year.What is the production budget (in units)for 2016?

Question

Quizplus · Accepted Answer

To calculate the production budget, we need to consider the expected sales, beginning inventory, and desired ending inventory.

Expected sales = 75,000 units 
Beginning inventory = 20,000 units 
Desired ending inventory = 10,000 units

Total units needed = Expected sales + Desired ending inventory - Beginning inventory 
Total units needed = 75,000 + 10,000 - 20,000 = 65,000 units

Therefore, the production budget for 2016 is 65,000 units (option B).

The Ralston Company Manufactures a Special Line of Graphic Tubing