Answer:
24,000 units
Explanation:
Given:
Budgeted sales for January = 30,000
Budgeted sales for February = 20,000
Opening inventory in January = 7,500
Desired ending inventory = 20% of sales in February
= 0.2 × 20,000
= 4,000 units
Units required in January = 30,000 + 4,000
= 34,000 units
Units to be produced in January = 34,000 - opening inventory
= 34,000 - 7,500
= 26,500 units
Budgeted sales for February = 20,000
Budgeted sales for March = 40,000
Opening inventory in February is closing inventory of January = 4,000
Desired ending inventory = 20% of sales in March
= 0.2 × 40,000
= 8,000 units
Units required in February = 20,000 + 8,000
= 28,000 units
Units to be produced in February = 28,000 - opening inventory
= 28,000 - 4,000
= 24,000 units
