Question

g Knowledge Check 03 Vineyard Corporation, a manufacturer of fine wines, began the year with 20,000 bottles in inventory. The company estimated the budgeted sales for the four quarters of the current year to be 200,000 bottles, 150,000 bottles, 250,000 bottles, and 400,000 bottles, respectively. The management feels that an ending inventory of 10% of the subsequent quarter's sales is appropriate. What are the production needs for the first quarter? 160,000 bottles 175,000 bottles 195,000 bottles 215,000 bottles

Answer 1

Answer:

195,000 bottles

Explanation:

Given that,

Beginning inventory  = 20,000 bottles

Budgeted sales for the four quarters:

Quarter 1 = 200,000 bottles

Quarter 2 = 150,000 bottles

Quarter 3 = 250,000 bottles

Quarter 4 = 400,000 bottles

Ending inventory = 10% of the subsequent quarter's sales

Production:

= Ending inventory + Sales - Beginning inventory

= (150,000 × 10) + 200,000 - 20,000

= 195,000 bottles

Therefore, the production needs for the first quarter is 195,000 bottles.