Ben Company has the following sales forecast for the next quarter: April,20,000 units; May,24,000 units; June,28,000 units.Sales totalled 16,000 units in March.The March finished goods inventory was 4,000 units.End-of-month finished goods inventory levels are planned to be equal to 20 percent of the next month's planned sales.
-What is the planned production for Ben Company for April?
A)19,200 units
B)20,800 units
C)21,200 units
D)24,800 units

Question

Ben Company has the following sales forecast for the next quarter: April,20,000 units; May,24,000 units; June,28,000 units.Sales totalled 16,000 units in March.The March finished goods inventory was 4,000 units.End-of-month finished goods inventory levels are planned to be equal to 20 percent of the next month's planned sales. 
-What is the planned production for Ben Company for April?
A)19,200 units
B)20,800 units
C)21,200 units
D)24,800 units

Quizplus · Accepted Answer

The planned production for April can be calculated as follows: - Desired end-of-month inventory for April = 20% of May's planned sales = 20% of 24,000 = 4,800 units.- Total needs for April (sales + ending inventory) = 20,000 (April sales) + 4,800 (end inventory for April) = 24,800 units.- Less beginning inventory (March ending inventory) = 4,000 units.- Therefore, planned production for April = 24,800 - 4,000 = 20,800 units.

Ben Company Has the Following Sales Forecast for the Next