Question

10,400 units in April, 13,000 unit in May, and 16,100 units in June. The company maintains an ending finished goods inventory equal to 20% of budgeted sales in units for the next month. April 1 beginning inventory is projected to be 2,080 units. How many units will the company produce in May

Answer 1

Answer:

13,620 units

Explanation:

The computation of the no of units produced is shown below;

Given that

Budgeted sales in May = 13,000 units

Budgeted sales in June = 16,100 units

Ending finished goods inventory is

= 20% of budgeted sales in units for the next month.

= Budgeted sales in June × 20%

= 16,100 × 20%

= 3,220 units

Now

Ending finished goods inventory for April is

= Budgeted sales in May × 20%

= 13,000 × 20%

= 2,600 units

 

Now Budgeted production in May is

= Budgeted sales in May + Ending finished goods inventory - Beginning finished goods inventory

= 13,000 + 3,220 - 2,600

= 13,620 units