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:

Question

Cheeky

Business

18 June, 14:20

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:

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Alexandra Eaton · Answer 1

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