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28 October, 11:16

Bengal Co. provides the following unit sales forecast for the next three months: July August September Sales units 5,900 6,600 6,460 The company wants to end each month with ending finished goods inventory equal to 25% of the next month's sales. Finished goods inventory on June 30 is 1,475 units. The budgeted production units for July are:

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  1. 28 October, 11:30
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    Units to be produced 6,075

    Explanation:

    July production budget

    sales for the period 5,900

    desired ending inventory

    25% of next month

    25% of August

    25% of 6,600 = 1,650

    Total requirement needs 7,550

    Beginning Inventory (1,475)

    Units to be produced 6,075

    The forecast sales and the desired ending inventory are the needs for production, the beginning inventory is an amount we already have. So it decreases our production demand.
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