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Goryan [66]
3 years ago
13

XYZ Co. has forecasted June sales of 400 units and July sales of 700 units. The company maintains ending inventory equal to 125%

of next month's sales. June beginning inventory reflects this policy. What is June's required production?
Business
1 answer:
Gnesinka [82]3 years ago
7 0

Answer:

775 units

Explanation:

By forecast,

June sales = 400 units

July sales = 700 units

if ending inventory equal to 125% of next month's sales

Then June's ending inventory = 125% × 700

                                                  = 875 units

May's ending inventory = 125% × 400

                                       = 500 units

Opening inventory + production - sales = closing inventory

Using the formula above, where p = production

500 + p - 400 = 875

p = 875 - 100

p = 775

Production required for June is 775 units.

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