Question

Exercise 21-4

Turney Company produces and sells automobile batteries, the heavy-duty HD-240. The 2017 sales forecast is as follows.

Quarter		HD-240
1		5,200
2		7,220
3		8,280
4		10,180

The January 1, 2017, inventory of HD-240 is 2,080 units. Management desires an ending inventory each quarter equal to 40% of the next quarter’s sales. Sales in the first quarter of 2018 are expected to be 25% higher than sales in the same quarter in 2017.

Prepare quarterly production budgets for each quarter and in total for 2017.

TURNEY COMPANY Production Budget For the Quarter Ended December 31, 2017For the Year Ending December 31, 2017For the Month Ended December 31, 2017
Product HD-240
	Quarter
		1		2		3		4		Year
Direct Materials PurchasesTotal Materials RequiredBeginning Direct MaterialsDesired Ending Finished Goods UnitExpected Unit SalesDesired Ending Direct MaterialsRequired Production UnitsBeginning Finished Goods UnitTotal Required UnitsDirect Materials Per Unit
AddLess : Desired Ending Direct MaterialsExpected Unit SalesDesired Ending Finished Goods UnitDirect Materials PurchasesRequired Production UnitsDirect Materials Per UnitBeginning Direct MaterialsTotal Materials RequiredTotal Required UnitsBeginning Finished Goods Unit
Desired Ending Direct MaterialsBeginning Finished Goods UnitDesired Ending Finished Goods UnitTotal Materials RequiredExpected Unit SalesBeginning Direct MaterialsDirect Materials PurchasesDirect Materials Per UnitRequired Production UnitsTotal Required Units
AddLess : Beginning Direct MaterialsDirect Materials PurchasesExpected Unit SalesDesired Ending Direct MaterialsTotal Materials RequiredBeginning Finished Goods UnitTotal Required UnitsRequired Production UnitsDesired Ending Finished Goods UnitDirect Materials Per Unit
Beginning Direct MaterialsDirect Materials Per UnitTotal Materials RequiredBeginning Finished Goods UnitDirect Materials PurchasesExpected Unit SalesRequired Production UnitsTotal Required UnitsDesired Ending Direct MaterialsDesired Ending Finished Goods Unit

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Answer 1

TURNEY COMPANY Production Budget For the year Ending December 31, 2017 Product HD 240 Quarter 1 2 3 4 Year 52001 7220 828010180 2888 3312 4072 2600 | 10532 12352 12780 2080 2888 3312 4072 6008 7644 9040 8708 _ 31400 Expected units sales Add: Desire Ending Inventory Total required units Less: Beginning Inventory Required production units Working notes: Ending Inventory is 40% of next quarter sales 1 Quarter = 7220 * 40/100 = 2888 2 Quarter = 8280* 40/100 = 3312 3 Quarter = 10180* 40/100 = 4072 4 Quarter = (5200 *125 /100 = 6500 * 40/100= 2600 Beginning Inventory is previous quarter Ending Inventory 1 Quarter = 2080 2 Quarter = 2888 3 Quarter = 3312 4 Quarter = 4072