[B]production & purchase budgets[/B]

Actual:
May 5900 units
June 6200

Forecast:
July 6000
August 6800
Sept 5600
October 5300

Question:
The firm's policy is to have finished goods inventory on hand at the end of the month that is equal to 70 % of the next month's sales. They estimated 4000 units on hand at the end of June.

Thank you

Quote:

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Originally Posted by skillet

[B]production & purchase budgets[/B]

actual:
may 5900 units
june 6200

forecast:
july 6000
august 6800
sept 5600
october 5300

question:
the firm's policy is to have finished goods inventory on hand at the end of the month that is equal to 70 % of the next month's sales. they estimated 4000 units on hand at the end of june.

thank you

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And the question is?

Quote:

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Originally Posted by CaptainForest

and the question is?

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Sorry, the question is this , I need to know the number of units to be produced in each months of July,August and September.

Quote:

---

Originally Posted by skillet

actual:
may 5900 units
june 6200

forecast:
july 6000
august 6800
sept 5600
october 5300

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Are these sales numbers?

Assuming those are sales number/month:

Month-> Sales---> Units at end of month
June------------> 4000----------------->production=end+sales-beg
July----> 6000---> 4760----------------->6760
Aug----> 6800---> 3920----------------->5960
Sept--->5600---> 3710----------------->5390
Oct----> 5300--->

Therefore,
In July 6760 units should be produced
In Aug 5960 units should be produced
In Sept 5390 units should be produced

Quote:

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Originally Posted by CaptainForest

Assuming those are sales number/month:

Month-> Sales---> Units at end of month
June------------> 4000----------------->production=end+sales-beg
July----> 6000---> 4760----------------->6760
Aug----> 6800---> 3920----------------->5960
Sept--->5600---> 3710----------------->5390
Oct----> 5300--->

Therefore,
In July 6760 units should be produced
In Aug 5960 units should be produced
In Sept 5390 units should be produced

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Thank you
Second part of this question is this.
Each unit of finished product requires 6.5 pounds of raw material. They want raw material inventory on hand at the end of each month that is equal to 60% of the next month's estimated usage. 26000 pounds of raw material will be on hand at the end of June.
Calculate the number of pounds of raw materials to be purshased for July and August?