Question

Sales for january are budgeted at 50,000 units, and the company expects sales to increase 4% each month. how many units will need to be purchased in february if the company's policy is to keep ending inventory each month at 10,000 units?

Answer 1

Sales for January = 50,000 units

Sales for February = January sales + 4 % of January sales = 50,000 units + 4 % * 50,000 units

Sales for February = 52,000 units

Total units needed to be purchased in February = Sales for February + Ending inventory - Beginning Inventory

Ending inventory = 10,000 units

Beginning inventory = 10,000 units

Total units needed to be purchased in February = 52,000 units + 10,000 units - 10,000 units

Total units needed to be purchased in February = 52,000 units