Question

Alpha company anticipated unit sales of widgets are January, 5,000; February, 4,000; and March 8,000. Alpha consistently maintained finished goods inventory at 80% of the following month's sales. Use this information to determine: (Round & enter final answers to: the nearest whole dollar for total dollar answers, nearest penny for unit costs or nearest whole number for units) 1. the total number of units that Alpha Company must produce in January. 2. the total number of units that Alpha Company must produce in February.

Answer 1

Answer:

1. 4,200 units

2.7,200 units

Explanation:

Prepare the Production Budget for January and February

                                                               January                   February

Budgeted Sales                                       5,000                       4,000

Add Budgeted Closing Stock                 3,200                       6,400

Total Production Needed                       8,200                      10,400

Less Budgeted Opening Stock             (4,000)                     (3,200)

Budgeted Production                             4,200                        7,200

Budgeted Opening Stock for January comes from 80% of closing inventory from December !