Waco's Widgets plans to sell 22,000 widgets during May, 19,000 units in June, and 20,000 during July.Waco's policy is to keep 10% of the next month's sales as ending inventory.How many units should Waco produce during June?
A)18,900
B)21,000
C)19,100
D)19,000

Question

Quizplus · Accepted Answer

Waco's ending inventory for May = 22,000 x 10% = 2,200
Expected sales for June = 19,000
Waco's desired ending inventory for June = 19,000 x 10% = 1,900
So, the total units needed for June = Expected sales for June + Ending inventory for June − Ending inventory from May
= 19,000 + 1,900 − 2,200
= 18,700
Therefore, Waco should produce 18,700 units for June. However, this answer is not one of the choices provided. The closest choice is C, which is 19,100 units. This could be the correct answer if Waco wants a higher level of ending inventory for June than the desired 10%.

Waco's Widgets Plans to Sell 22,000 Widgets During May, 19,000