Keep-it-Cool Products Inc.manufactures a medium-sized drink cooler.At 30 June,the company had 5000 coolers in inventory.The company's policy is to maintain a cooler inventory equal to 15 per cent of next month's sales.The company expects the following sales activity for the third quarter of the year:
$\begin{array}{ll}
\text { July } & 50000 \text { coolers } \
\text { August } & 40000 \text { coolers } \
\text { September } & 25000 \text { coolers }
\end{array}$

How many coolers should be produced in August?
A) 37 750 coolers
B) 36 250 coolers
C) 42 250 coolers
D) 43 750 coolers

Question

Keep-it-Cool Products Inc.manufactures a medium-sized drink cooler.At 30 June,the company had 5000 coolers in inventory.The company's policy is to maintain a cooler inventory equal to 15 per cent of next month's sales.The company expects the following sales activity for the third quarter of the year:
$\begin{array}{ll}
\text { July } & 50000 \text { coolers } \
\text { August } & 40000 \text { coolers } \
\text { September } & 25000 \text { coolers }
\end{array}$

How many coolers should be produced in August?
A) 37 750 coolers
B) 36 250 coolers
C) 42 250 coolers
D) 43 750 coolers

Quizplus · Accepted Answer

The correct answer is A because the company's policy is to maintain a cooler inventory equal to 15 per cent of next month's sales. The company expects to sell 40000 coolers in August, so the desired ending inventory for July is 40000 * 15% = 6000 coolers. The company had 5000 coolers in inventory at the end of June, so the company needs to produce 6000 - 5000 = 1000 coolers in July. The company expects to sell 25000 coolers in September, so the desired ending inventory for August is 25000 * 15% = 3750 coolers. The company had 5000 coolers in inventory at the end of June and will produce 1000 coolers in July, so the company will have 5000 + 1000 = 6000 coolers in inventory at the end of July. The company needs to produce 3750 - 6000 = 37 750 coolers in August.

Keep-It-Cool Products Inc How Many Coolers Should Be Produced in August? A) 37

Keep-It-Cool Products Inc How Many Coolers Should Be Produced in August?
A) 37