Question

A company budgeted unit sales of 204,000 units for January, 2017 and 240,000 units for February 2017. The company has a policy of having an inventory of units on hand at the end of each month equal to 30% of next month's budgeted unit sales. If there were 61,200 units of inventory on hand on December 31, 2016, how many units should be produced in January, 2017 in order for the company to meet its goals? 214,800 units 204,000 units 193,200 units 276,000 units

Answer 1

Answer:

214,800 units should be produced in January, 2017 in order for the company to meet its goals

Explanation:

Prepare a Production Budget for January 2017 as follows ;

                                                                                 January

Budgeted Sales                                                      204,000

Add Budgeted Closing Stock(240,000×30%)        72,000

Total Production Needed                                       276,000

Less Budgeted Opening Inventory (December)   (61,200)

Budgeted Production                                              214,800