Production Budget Aqua-pro Inc. produces submersible water pumps for ponds and cisterns. The unit sales for selected months of the year are as follows: Unit Sales April 180,000 May 220,000 June 200,000 July 240,000 Company policy requires that ending inventories for each month be 25% of next month's sales. However, at the beginning of April, due to greater sales in March than anticipated, the beginning inventory of water pumps is only 21,000. Prepare a production budget for the second quarter of the year. Show the number of units that should be produced each month as well as for the quarter in total.

Production Budget April  214,000    

Production Budget  May 215,000    

Production Budget June  210,000                  

Production Budget Total    639,000

Explanation:

We use the formula to calculate the production budget

Production = Sales + Ending Inventory - Opening Inventory.

Aqua-pro Inc.

Production Budget

For the Quarter

Particulars                 April          May        June        July            Total

Unit Sales            180,000    220,000   200,000    240,000

Add Desired

Ending Inventory 55,000     55,000    60,000      --x---x---x--

Less Opening

Inventory           21,000          55,000      50,000           60,000                  

Production Units  214,000     215,000      210,000                     639,000    

Ending Inventory Calculations

April  25% of 220,000= 55,000

May 25% of 200,000= 55,000

June 25% of 240,000 =60,000

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