 in the next month. So that would be the 19-6. So we're thinking about the 19-6 and then we're gonna say that we're gonna take 80% of that to be our cushion. So it's gonna be 0.8. If we want to make that a percent, we can go up to the home tab. We can go to the alignment group and we can go to the percent. Therefore we're gonna say that we're gonna equal the 19-6. Those are going to be the sales in the next month times the 80%. So that's how much we want to basically have on hand at the end of July that's still on hand after the sales of the 20,006. We're gonna do the same thing over here. We're gonna say well for August we're gonna say equals and take the September sales. We want to take next month sales according to our rule times 80% and we're gonna say the 80% make that a percentage and multiply that out. So of the next month's projected times the 80% we think we want as of the end of August 16,080 units left over according to this policy and then you might be going well what about September because obviously our sales budget only goes up to September and that's one of those areas where the problem's gonna have to give you some more data in terms of well what do we think the budgeted sales are gonna be for October which is outside of the of our quarter that we're budgeting for but we need that if this is the policy. So we're gonna have to go down our data and that's why it gives us this October number out here and we're gonna say 20,006 is what we think is October so we're gonna have to multiply that times the 0.8 the ending balance number and we'll take the percentage of that and then multiply that out so we got the 20,006 times the 80% and okay so now we've just entered some labels here so we have the ratio we have the budget ending inventory in units remember we're talking about units as opposed to dollars got to keep that in mind as we go through this and then we'll add this up so the required units of available production that's gonna equal the budgeted units this is how many we think we're actually gonna sell in July plus the cushion what we want left over in ending inventory so we're gonna sell 20,006 and we want 15,680 in the warehouse as of the end of July just in case we sell more and or to kid us ready for August so we're gonna hit tab we're gonna do the same thing you could copy and paste the formula however I'm just gonna calculate it a few times so we can see that calculation so it's gonna be the amount we're gonna produce plus the amount that we want in ending inventory equals in September the amount we're gonna produce in September plus the amount we want in ending inventory okay and now you might think we're finished with that but now this is what we need to produce and if we were starting at ground zero that would be the case however we probably have some stuff in the warehouse already so now that we know how many we want to produce if we had nothing now we got to subtract out the stuff that's already in the warehouse now this number can be a little bit tricky notice I put the wording in here less beginning inventory so this is the stuff that's already in the warehouse it could be a little bit tricky to get some of this numbers depending how the problem is set up we do note that like if we skip over to August we can see that well if the ending inventory that we want to have is 15,680 as of the end of July then if all accordance goes according to plan then the beginning inventory for August will equal that number so so we know that that's going to be the case if we're going to end with with in July 15,680 then we're gonna start in August with 15,680 according to the plan and of course if we're gonna end in August with 16,080 then we're gonna begin in September with equals this 16,080 and so we have that now of course where are we gonna get this beginning number because once again we don't have the beginning information they're gonna have to provide that in in some way one way that it often will be provided in a lot of problems obviously if we could look at the budget from from the prior period to see that or see the actual numbers on the balance sheet we can see here that we have finished goods of this 325,540 here that's in dollars however so notice the balance sheet of course is in dollars if we could divide that by the cost per unit then that should give us the the number that we want here so we could try that and if we scroll down we're gonna say that the cost production cost per unit is 1950 in dollars so we can we can calculate it in that way we can say well this is going to equal the finished goods of 325,540 divided by the cost nineteen dollars and fifty cents means that we have 16,694 here also want to note that there could be some rounding issues in these problems so notice that this one I'm rounding to the dollar and it's really got some pennies in there we are budgeting however therefore you know it's an estimate anyway so a dollar rounding is not going to affect the budget in a material way for that reason I don't think using pennies is gonna help us to make decisions that much so we're gonna round it off let Excel round it note that when you're using a calculation that has a rounded number in Excel it does actually use the actual number being this number this this ratio even though it's only showing a rounded number of 16,694 so always keep that in mind when you're working with Excel Excel because that could drive you crazy if the calculations are a little off and you're thinking why is that so now we're gonna subtract this out so now we have this is how much we need to produce if we didn't have any on hand but minus we do have units on hand of this therefore we only need to produce nineteen five eighty six we're gonna do the same thing here this equals the 35 680 we would need to produce in August if we didn't have any on hand but we know that we're gonna have 15 680 on hand therefore we only have to produce 20,000 if everything goes according to plan and then over here in September we're gonna say well this is 36 580s how much we would have to produce if we didn't have any on hand but we are planning to have 16 80 on hand at the beginning of the month and therefore don't need to produce those so this is going to be the units to be produced and we could sum that up for the quarter we could say this equals the sum of the units for July August and September would add up to the 60,086 so take a look at this calculation you're gonna see this a few different ways a few different times we're gonna do the same thing when we start to calculate the materials so whenever we think about how much we're gonna need in terms of a budgeting stance we're gonna say well how you know how much are the sales gonna be we're gonna need that and then we're gonna add to it how much we think Indian inventory should be how much of a cushion do we want over the sales price or in the case of materials over the amount that we're going to use and if we add those two things up that will give us the amount that we would need to produce if we had nothing on hand as of the beginning of the period the month in this case and then we'll subtract out how much we actually do have on hand and that will give us the amount in this case that needs to be produced in the case of materials the amount that will need to be purchased now that we know how many units we need to produce we will then next time move on to the raw materials budget and of course the raw materials budget remember the units the widgets that we're producing is going to be made up of raw material so if we're producing like guitars then the guitar is a total thing the raw material that is like the wood and the glue and whatever that are going to go into it so now that we have the units that we need to produce in total in total now we got to think about well how much stuff do we need to purchase in terms of raw materials