Question

1. A company expects to sell 400 units of Product X in January and then expects sales to increase by 10% per month. If Product X sells for $10 each, the total sales for the first quarter of the year will be $
2. A manufacturing company expects to sell 12,000 units in August and 15,000 units in September. The company desires to have an ending inventory of 80% of the next month's sales. If inventory on August 1 is 8,000 units, then the company should produce units in August.

3. A manufacturer requires an ending inventory of 5,000 units. Their budgeted unit sales are 20,000 units and beginning finished goods inventor is 3,000 units. The units to be produced is

Answer 1

Answer:

1. Sales = $13,240

2. 13,600 units

3. 22,000 units

Explanation:

1. The sales are increasing by 10% every month. So,

• January Sales in units = 400
• February Sales in units = 400 * 1.1 = 440
• March Sales in units = 440 * 1.1 = 484

• January Sales = 400 * $10 ⇒ $4000
• February Sales = 440 * $10 ⇒ $4400
• March Sales = 484 * $10 = 4840
• Total Quarter Sales = 4000 + 4400 + 4840 = $13240

2. The closing inventory for July or opening Inventory for August should have been 80% of August sales,

• 12000 * 0.8 = 9600 units
• Shortfall in Opening Inventory = 9600 - 8000 = 1600 units

The ending inventory for the August should be equal to 80% of September Sales, So

• 15000 * 0.8 = 12000 units
• So, August production should be = 1600 + 12000 = 13600 units

3. Let the Units to be Produced be x,

Sales = Opening Inventory + Production - Closing Inventory

20000 = 3000 + x - 5000

20000 + 5000 = 3000 + x

25000 - 3000 = x

22000 = x

Answer 2

Answer:

1. $13,240

2. 16,000 units

3. 22,000 units.

Explanation:

The question is answered as follows

Part 1: Determine the total sales for the first quarter as follows

January Sales in Units = 400 Units

February Sales Units = 400 x 110% or 1.1= 440 units

March Sales Unites = 440 x 110% or 1.1. = 484 units

Total Sales = 1,324 x $10 = $13, 240

Part 2: Determine Production In August

Production in August making use of the relevant figures

= Expected units + (Expected units in september x 80%) - Inventory on August 1

= 12,000 + (0.8 x 15,000) - 8000= 16,000 Units

Part 3: Determine the Production Units as follows

Sales Units + Closing Inventory of finished goods - The Opening Inventory of finished goods

= 20,000 units + 5,000 units - 3000 units = 22,000 units