The sales budget of the Owens Company for each of the next three months is shown: $$\begin{array} { l l }
\text { January } & 40,000 \text { units } \
\text { February } & 50,000 \text { units } \
\text { March } & 30,000 \text { units }
\end{array}$$ The company's policy requires that 20% of the following month's budgeted sales units are on hand at the beginning of each period.How many units must be produced in February?
A)40,000 units
B)46,000 units
C)56,000 units
D)54,000 units

Question

The sales budget of the Owens Company for each of the next three months is shown: $$\begin{array} { l l } 
\text { January } & 40,000 \text { units } \
\text { February } & 50,000 \text { units } \
\text { March } & 30,000 \text { units }
\end{array}$$ The company's policy requires that 20% of the following month's budgeted sales units are on hand at the beginning of each period.How many units must be produced in February?
A)40,000 units
B)46,000 units
C)56,000 units
D)54,000 units

Quizplus · Accepted Answer

To calculate the units to be produced in February, start with February's sales (50,000 units), add 20% of March's sales (6,000 units), and subtract 20% of February's sales (10,000 units) that were already on hand from January. This results in 46,000 units to be produced.

The Sales Budget of the Owens Company for Each of the Next