Answer:
Desired Ending Inventory for the second quarter is 25,000 bottles
Explanation:
Vineyard Corporation
1st Quarter
Beginning Inventory 20,000
Budgeted Sales 200,000 bottles,
Ending Inventory 15,000 bottles ( 10% of the 2nd quarter's sales)
As the management has already decided that an ending inventory of 10% of the subsequent quarter's sales is appropriate therefore we get Ending inventory by finding 10% of the subsequent quarter sales.
Vineyard Corporation
2nd Quarter
Beginning Inventory 15,000
Budgeted Sales 150,000 bottles,
Ending Inventory 25,000 bottles ( 10% of the 3rd quarter's sales)
(250,000*10/100= $ 25,000)
Vineyard Corporation
3rd Quarter
Beginning Inventory 25,000
Budgeted Sales 250,000 bottles,
Ending Inventory 40,000 bottles ( 10% of the 4th quarter's sales)
