Lorie Nursery plans to sell 320 potted plants during April and 240 units in May. Lorie Nursery keeps 15% of the next month's sales as ending inventory. How many units should Lorie Nursery produce during April?

A) 308

B) 332

C) 320

D) 356

A) 308

Explanation:

The Ending inventory is calculated by deduction the sold unit from the sum of production for the year and beginning inventory for the year.

We calculate the production for the period using ending inventory formula.

Ending Inventory = Beginning Inventory + Production for the period - Sale in the period

As we know the ending inventory of prior month is the opening inventory of current month and ending inventory is 15% of next period sale.

Beginning Inventory = 320 x 15% = 48 units

Ending inventory = 240 x 15% = 36 units

Sale in April = 320 units

placing Value in the formula

36 units = 48 units + production in April - 320 units

36 units = production in April - 272 units

Production in April = 272 units + 36 units = 308 units

Lorie Nursery should produce during April 308 units

Explanation:

According to the given data, In order to calculate how many units should Lorie Nursery produce during April we would have to use the followinf formula:

Required Production = Expected Sales + Desired Closing Invenory - Opening Inventory

Required Production = 320 + 240 * 15 % - 320 * 15 %

=320 + 36 - 48 = 308 units

Lorie Nursery should produce during April 308 units