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Cerrena [4.2K]
4 years ago
13

Flex-Tite manufactures plastic parts. The inventory policy at Flex-Tite is to hold inventory equal to 127% of the average monthl

y sales for its main product. Sales for the following year are expected to be 882,000 units. Based on the inventory policy, the budget calls for the production of 892,000 units.Required: What is the beginning inventory of the component?
Business
1 answer:
Naya [18.7K]4 years ago
3 0

Answer:

83,345  units

Explanation:

For computing the beginning inventory, first we have to determine the required inventory which is shown below:

Required inventory = (Expected sales units ÷ number of months in a year) × given percentage

= (882,000 units ÷ 12 months) × 127%

= 93,345 units

Now the beginning inventory would be

= Required inventory - (budget calls for the production - expected sales)

= 93,345 units - (892,000 units - 882,000 units)

= 93,345 units - 10,000 units

= 83,345  units

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