General Corporation manufactures boxes.The estimated number of boxes sold for the first three months are as follows:
$\begin{array}{ll}
\text { Month } & \text { Sales } \
\hline \text { January } & 3,000 \
\text { February } & 4,200 \
\text { March } & 3,900
\end{array}$
Finished goods inventory at the end of December was 900 units.Ending finished goods inventory is equal to 20 percent of the next month's sales.General Corporation expects to sell the boxes for $5 each.April sales are projected at 4,500 boxes.
-
How many boxes should be produced in February?
A)4,140 boxes
B)4,200 boxes
C)4,260 boxes
D)3,900 boxes

Question

General Corporation manufactures boxes.The estimated number of boxes sold for the first three months are as follows: 
$\begin{array}{ll}
\text { Month } & \text { Sales } \
\hline \text { January } & 3,000 \
\text { February } & 4,200 \
\text { March } & 3,900
\end{array}$ 
Finished goods inventory at the end of December was 900 units.Ending finished goods inventory is equal to 20 percent of the next month's sales.General Corporation expects to sell the boxes for $5 each.April sales are projected at 4,500 boxes.
-
How many boxes should be produced in February?
A)4,140 boxes
B)4,200 boxes
C)4,260 boxes
D)3,900 boxes

Quizplus · Accepted Answer

To calculate the number of boxes to be produced in February, we need to consider the ending inventory requirements and the beginning inventory. The ending inventory for February should be 20% of March's sales (3,900 boxes), which is 780 boxes. The beginning inventory for February is the ending inventory of January, which is 20% of February's sales (4,200 boxes), which is 840 boxes. Therefore, the production for February needs to cover February's sales (4,200 boxes), add the required ending inventory for February (780 boxes), and subtract the beginning inventory for February (840 boxes). This results in 4,200 + 780 - 840 = 4,140 boxes.

General Corporation Manufactures Boxes Finished Goods Inventory at the End of December Was 900