Aloan co. provides the following sales forecast for the next three months: january february march sales units 3,000 4,200 5,000 the

Aloan co. provides the following sales forecast for the next three months: january february march sales units 3,000 4,200 5,000 the company wants to end each month with ending finished goods inventory equal to 10% of the next month’s sales. finished goods inventory on december 31 is 300 units. the budgeted production units for january are:

Answers

Total= 3,120 units

Explanation:

Giving the following information:

production budget:

January= 3,000 units

February= 4,200 units

March= 5,000 units

The company wants to end each month with ending finished goods inventory equal to 10% of the next month’s sales.

Beginning inventory= 300 units.

To calculate the production for any month, we need to use the following formula:

Production= sales + desired ending inventory - beginning inventory

January:

Sales= 3,000

Desired ending inventory= (4,200*0.1)= 420

Beginning inventory= (300)

Total= 3,120 units

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Posts