Question

Ecology Co. sells a biodegradable product called Dissol and has predicted the following sales for the first four months of the current year: Jan. Feb. March. April. Sales in units 3,500 4,600 5,700 4,300 Ending inventory for each month should be 20% of the next month's sales, and the December 31 inventory is consistent with that policy. How many units should be purchased in February?

Answer 1

Answer:

4,820 units  

Explanation:

The computation of the purchased units in February month is shown below:

= Sale units + ending inventory units - beginning inventory units

where,  

Sale units is 4,600 units

Ending inventory units = 5,700 units × 20% = 1,140 units

Beginning inventory units = 4,600 × 20% = 920 units

Now put these units to the above formula  

So, the units would equal to  

= 4,600 units + 1,140 units - 920 units

= 4,820 units