Question

Cari Chair Company manufactures rocking chairs. The estimated number of rocking chair sales for each of the last three months of Year 1 is as follows: Month Unit Sales October 10,000 November 14,000 December 15,000 Finished goods inventory at the end of November was 4,000 units. Desired ending finished goods inventory is equal to 25 percent of the next month's sales. Cari Chair expects to sell the chairs for $100 each. January sales for Year 2 are projected at 16,000 chairs. How many chairs should Cari produce in December

Answer 1

Answer:

Production December=  15,000

Explanation:

Giving the following information:

Month Unit Sales

October 10,000

November 14,000

December 15,000

Finished goods inventory at the end of November was 4,000 units.

To calculate the production required for December, we need to use the following formula:

Production= sales + desired ending inventory - beginning inventory

Production=  15,000 + 16,000*0.25 - 4,000

Production=  15,000