Bright Lamp Company manufactures lamps.The estimated number of lamp sales for the last three months of 2011 are as follows: Finished goods inventory at the end of September was 3,000 units.Ending finished goods inventory is budgeted to equal 25 percent of the next month's sales.Bright Lamp expects to sell the lamps for $25 each.January 2012 sales are projected at 16,000 lamps.How many lamps should be produced in November?

Question

Bright Lamp Company manufactures lamps.The estimated number of lamp sales for the last three months of 2011 are as follows:  Finished goods inventory at the end of September was 3,000 units.Ending finished goods inventory is budgeted to equal 25 percent of the next month's sales.Bright Lamp expects to sell the lamps for $25 each.January 2012 sales are projected at 16,000 lamps.How many lamps should be produced in November?

Quizplus · Accepted Answer

To determine the number of lamps to be produced in November, we need to first calculate the budgeted sales for the months of October, November, and December:

October: 12,000 x 0.25 = 3,000 (ending finished goods inventory)
+ 12,000 (budgeted sales) = 15,000 (total needs)

November: 15,000 x 0.25 = 3,750 (ending finished goods inventory)
+ 11,000 (budgeted sales) = 14,750 (total needs)

December: 14,750 x 0.25 = 3,687.5 (ending finished goods inventory)
+ 13,000 (budgeted sales) = 16,687.5 (total needs)

Therefore, the total number of lamps to be produced in November is:

15,000 (October needs) - 3,000 (September inventory) = 12,000 (production in October)
14,750 (November needs) - 3,750 (October inventory) = 11,000 (production in November)

So, the answer is D) 13,750 lamps

Bright Lamp Company Manufactures Lamps