Use the information below to answer the following questions.
Patiomaster Products manufactures patio furniture. The estimated numbers of sets to be sold in the last three months of 2015 and the first month of 2016 is: Finished goods inventory at the end of September is 2,000 units. Finished goods inventory is set at 20 per cent of next month's sales.
-Refer to the table above. What will be the amount of total production for October 2015?
A) 9,600 units
B) 7,800 units
C) 9,400 units
D) 8,400 units

Question

Use the information below to answer the following questions.
Patiomaster Products manufactures patio furniture. The estimated numbers of sets to be sold in the last three months of 2015 and the first month of 2016 is:  Finished goods inventory at the end of September is 2,000 units. Finished goods inventory is set at 20 per cent of next month's sales.
-Refer to the table above. What will be the amount of total production for October 2015?
A) 9,600 units 
B) 7,800 units 
C) 9,400 units 
D) 8,400 units

Quizplus · Accepted Answer

To determine the total production for October, we need to find out the estimated sales for November and apply the 20% rule to calculate the production for October.

Estimated sales for November = 11,900 + 12,700 + 13,100 + 14,300 = 52,000 sets.

Finished goods inventory for October = 20% of 52,000 sets = 10,400 units.

Total production for October = Estimated sales for November + Finished goods inventory for October - Finished goods inventory at the end of September 
= 52,000 + 10,400 - 2,000 
= 60,400

Therefore, the answer is C) 9,400 units.

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