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12 December, 21:15

The Cardinal Company had a finished goods inventory of 55,000 units on January 1. Its projected sales for the next four months were: January - 200,000 units; February - 180,000 units; March - 210,000 units; and April - 230,000 units. The Cardinal Company wishes to maintain a desired ending finished goods inventory of 20% of the following months sales. What would be the budgeted production for March?

(A) 256,000

(B) 206,000

(C) 214,000

(D) 298,000

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  1. 12 December, 21:23
    0
    Given:

    Goods inventory = 55,000

    Sales:

    January - 200,000 units

    February - 180,000 units

    March - 210,000 units

    April - 230,000

    First we'll compute the increase in inventory;

    Increase in inventory = (230,000*20%) - (210,000*20%)

    = 46000 - 42000

    = 4000

    Sales for March = 210000

    ∴ Budgeted production for March = Increase in inventory + Sales for March

    Budgeted production for March = $4000 + $210000

    Budgeted production for March = $214000
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