Question

The Ralston Company manufactures a special line of graphic tubing items. The company estimates it will sell 85,000 units of this item in 2016. The beginning finished goods inventory contains 30,000 units. The target for each year's ending inventory is 20,000 units. Each unit requires six feet of plastic tubing. The tubing inventory currently includes 85,000 feet of the required tubing. Materials on hand are targeted to equal 3 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 2016

Answer 1

Production budget = 75,000 units

Step-by-step explanation:

The production budgeted for a particular period is the expected units to be produced after adjusting the sales budget figures for opening and closing inventories.

Production = Sales volume + closing inventory - opening inventory

Production budget for 2016

=85,000 + 20,000 - 30,000

= 75,000 units