Answer:
Instructions are listed below.
Explanation:
Giving the following information:
Sales:
September= 3,700 units
October= 4,800 units
November= 6,900 units
December= 7,800 units.
The company’s policy is to maintain finished goods inventory equal to 60% of the next month’s sales. At the end of August, the company had 2,600 finished units on hand.
To calculate the production for each month, we need to use the following formula:
Production= sales + desired ending inventory - beginning inventory
September:
Sales= 3,700
Desired ending inventory= (4,800*0.6)= 2,880
Beginning inventory= (2,600)
Total= 3,980
October:
Sales= 4,800
Desired ending inventory= (6,900*0.6)= 4,140
Beginning inventory= (2,880)
Total= 6,060
November:
Sales= 6,900
Desired ending inventory= (7,800*0.6)= 4,680
Beginning inventory= (4,140)
Total= 7,440
