Victoria Company's policy is to keep 20% of the next month's sales in ending inventory.If Victoria meets this policy for its ending inventory in May,and sales are expected to be 14,000 units in June and 20,000 units in July,how many units need to be produced in June?
A)20,800 units
B)12,800 units
C)18 000 units
D)15,200 units
E)None of the answer choices is correct.

Question

Quizplus · Accepted Answer

First, we need to calculate the amount of inventory needed for June and July based on the 20% policy.

Ending Inventory for June = 20% of July sales = 20% of 14,000 = 2,800 units 
Ending Inventory for July = 20% of August sales = 20% of 20,000 = 4,000 units

Next, we can calculate the total number of units needed for June:

Total units needed for June = Expected June sales + Ending inventory for July - Ending inventory for June 
Total units needed for June = 14,000 + 4,000 - 2,800 
Total units needed for June = 15,200

Therefore, the correct answer is D.

Victoria Company's Policy Is to Keep 20% of the Next