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18 May, 05:14

Meadow Company produces hand tools. A sales budget for the next four months is as follows: March 10,000 units, April 13,000, May 16,000 and June 21,000. Meadow Company's ending finished goods inventory policy is 10% of the following month's sales. March 1 beginning inventory is projected to be 1,400 units. How many units will be produced in March?

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  1. 18 May, 05:19
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    Production = 9,900 units

    Explanation:

    Giving the following information:

    Sales:

    March 10,000 units

    April 13,000 units

    The desired ending finished goods inventory is 10% of the following month's sales.

    March 1 beginning inventory is projected to be 1,400 units.

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

    Production = sales + desired ending inventory - beginning inventory

    Production = 10,000 + (13,000*0.1) - 1,400

    Production = 9,900 units
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