Phillip Co.manufactures decorative pillows designed for use on outdoor patios.Phillip requires that 30 percent of next month's sales be on hand at the end of each month.The following information is available regarding budgeted sales of pillows: What is budgeted production for April?
A)30,000
B)34,200
C)43,200
D)21,000

Question

Phillip Co.manufactures decorative pillows designed for use on outdoor patios.Phillip requires that 30 percent of next month's sales be on hand at the end of each month.The following information is available regarding budgeted sales of pillows:  What is budgeted production for April?
A)30,000 
B)34,200 
C)43,200 
D)21,000

Quizplus · Accepted Answer

To calculate budgeted production for April, we need to add the required ending inventory to the budgeted sales for April and subtract the beginning inventory for April.

Required ending inventory for April = 30% of budgeted sales for May = 0.30 * $144,000 = $43,200

Beginning inventory for April is not given, so we assume it to be zero.

Therefore, budgeted production for April = Budgeted sales for April + Required ending inventory - Beginning inventory 
= $120,000 + $43,200 - $0 
= $163,200

Hence, the best choice is B, which is $163,200.