Bend Company's projected sales budget for the next four months is as follows: $$\begin{array} { l l }
& \text { Units } \
\text { January } & 70,000 \
\text { February } & 90,000 \
\text { March } & 55,000 \
\text { April } & 65,000
\end{array}$$ Beginning inventory for the year is 27,000 units. Ending inventory for each month should be 30% of the next month's sales.
How many units need to be available for sale in February?
A) 90,000
B) 106,500
C) 73,500
D) 117,000

Question

Bend Company's projected sales budget for the next four months is as follows: $$\begin{array} { l l } 
& \text { Units } \
\text { January } & 70,000 \
\text { February } & 90,000 \
\text { March } & 55,000 \
\text { April } & 65,000
\end{array}$$ Beginning inventory for the year is 27,000 units. Ending inventory for each month should be 30% of the next month's sales.
How many units need to be available for sale in February?
A) 90,000
B) 106,500
C) 73,500
D) 117,000

Quizplus · Accepted Answer

To calculate the units needed for sale in February, we need to consider the desired ending inventory for February, which is 30% of March's sales (55,000 units), and the beginning inventory for February. The ending inventory for February should be 30% of 55,000, which is 16,500 units. The beginning inventory for February is the ending inventory of January, which should be 30% of February's sales (90,000 units), resulting in 27,000 units (30% of 90,000). Therefore, the total units needed for February = February sales (90,000) + ending inventory for February (16,500) - beginning inventory for February (27,000). This equals 90,000 + 16,500 - 27,000 = 79,500. However, this calculation seems to have an error in interpreting the given choices, as none match the calculated figure. The correct approach to find how many units need to be available for sale would typically involve adding the desired ending inventory to the sales and subtracting the beginning inventory, but the provided choices and calculation do not align with this standard approach. Given the discrepancy, the explanation provided does not match the choices, indicating a mistake in the calculation or interpretation of the question. The correct calculation for units needed to be available for sale in February should consider both sales for February and the necessary ending inventory for that month, adjusted by the beginning inventory, which is the ending inventory of the previous month. Without the correct calculations aligning to the provided choices, the intended answer based on the question's logic seems to be misinterpreted in this explanation.

Bend Company's Projected Sales Budget for the Next Four Months