Foremost Corporation manufactures boxes. The estimated number of boxes sold for the first three months of the current year are: $$\begin{array} { l l }
\text { Month } & \text { Sales } \
\text { January } & 3,000 \
\text { February } & 4,200 \
\text { March } & 3,900
\end{array}$$ Finished goods inventory at the end of December was 900 units. Ending finished goods inventory is equal to 20 percent of the next month's sales. General Corporation expects to sell the boxes for $5 each. April sales is projected at 4,500 boxes.
How many boxes should be produced in February?
A)4,140 boxes
B)4,200 boxes
C)4,260 boxes
D)3,900 boxes

Question

Foremost Corporation manufactures boxes. The estimated number of boxes sold for the first three months of the current year are: $$\begin{array} { l l } 
\text { Month } & \text { Sales } \
\text { January } & 3,000 \
\text { February } & 4,200 \
\text { March } & 3,900
\end{array}$$ Finished goods inventory at the end of December was 900 units. Ending finished goods inventory is equal to 20 percent of the next month's sales. General Corporation expects to sell the boxes for $5 each. April sales is projected at 4,500 boxes.
How many boxes should be produced in February?
A)4,140 boxes
B)4,200 boxes
C)4,260 boxes
D)3,900 boxes

Quizplus · Accepted Answer

To calculate the number of boxes to be produced in February, we need to consider the ending inventory requirements for February, which is 20% of March's sales (3,900 boxes). 20% of 3,900 is 780 boxes. The beginning inventory for February is the ending inventory of January, which is 20% of February's sales (4,200 boxes), so 20% of 4,200 is 840 boxes. The total requirement for February is its sales (4,200 boxes) plus the ending inventory requirement for February (780 boxes) minus the beginning inventory (840 boxes), which equals 4,140 boxes.

Foremost Corporation Manufactures Boxes Finished Goods Inventory at the End of December Was 900