The Sun Company manufactures a special line of graphic tubing items.The company estimates it will sell 75,000 units of this item in 2012.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 2012?

Question

Quizplus · Accepted Answer

To calculate the production budget, we need to consider the following factors:

1. Expected sales for the year: 75,000 units
2. Beginning finished goods inventory: 20,000 units
3. Target ending finished goods inventory: 10,000 units
4. Total units to be produced: (Expected sales + Target ending inventory) - Beginning inventory

Using the above formula, we get:

Total units to be produced = (75,000 + 10,000) - 20,000
Total units to be produced = 65,000

Therefore, the production budget for 2012 is 65,000 units (option B).

The Sun Company Manufactures a Special Line of Graphic Tubing