QUIZ 2 BUDGETING

Short Answer

ABC Company has budgeted the following unit sales:

2019 2020
Quarter Units Quarter Units
1 70,000 1 60,000
2 40,000
3 50,000
4 80,000

The finished goods inventory on hand on 31 December 2018 was 14,000 units.(carryforward for 2019) It is
the company's policy to maintain a finished goods inventory at the end of each quarter equal to 20% of
the next quarter's anticipated sales.

Required :
Prepare a production budget for 2019.

Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year

Units sold 70,000 40,000 50,000 80,000 240,000

Plus : Ending 8,000 10,000 16,000 12,000 12,000

Inventory

Total needs 78,000 50,000 66,000 92,000 252,000

Less : (14,000) (8,000) (10,000) (16,000) (14,000)

Beginning
Inventory

Units to be 64,000 42,000 56,000 76,000 238,000

produced