Bright Lights Company manufactures lamps. The estimated lamp sales for the last three months of the current year are as follows: Month Sales
October 10,000
November 13,000
December 15,000
Finished goods inventory at the end of September was 3,000 units. Ending finished goods inventory is budgeted to equal 25% of the next month's sales. The company expects to sell the lamps for $25 each. The first three months of the next year's sales are projected at 16,000 lamps. How many lamps should be produced in November?

Question

Quizplus · Accepted Answer

To calculate the number of lamps to be produced in November, we need to consider the sales for November, the desired ending inventory for November, and the beginning inventory for November. The desired ending inventory for November is 25% of December's sales, which is 0.25 * 15,000 = 3,750 lamps. The beginning inventory for November is the ending inventory for October, which is 25% of November's sales, or 0.25 * 13,000 = 3,250 lamps. Therefore, the production for November is calculated as: November sales (13,000) + desired ending inventory (3,750) - beginning inventory (3,250) = 13,500 lamps.

Bright Lights Company Manufactures Lamps