Molina Company has the following sales forecast for the next quarter: April, 20,000 units; May, 24,000 units; June, 28,000 units. Sales totaled 16,000 units in March. The March finished goods inventory was 4,000 units. End-of-month finished goods inventory levels are planned to be equal to 20 percent of the next month's planned sales.
The planned production for Ben Company for April is
A)19,200 units.
B)20,800 units.
C)21,200 units.
D)24,800 units.

Question

Quizplus · Accepted Answer

To determine the planned production for April, we need to calculate the desired ending inventory for April: 
20% of May's planned sales = 20% * 24,000 = 4,800 units 
So, the desired ending inventory for April is 4,800 units.

Next, we need to calculate the required production for April: 
Required production = April sales forecast - March finished goods inventory + desired ending inventory 
Required production = 20,000 - 4,000 + 4,800 
Required production = 20,800

Therefore, the planned production for Ben Company for April is 20,800 units.

Molina Company Has the Following Sales Forecast for the Next