Noel Enterprises has budgeted sales in units for the next five months as follows: Past experience has shown that the ending inventory for each month must be equal to 10% of the next month's sales in units.The inventory on May 31 contained 400 units.The company needs to prepare a production budget for the second quarter of the year. The desired ending inventory for August is:
A)720 units
B)460 units
C)540 units
D)380 units

Question

Noel Enterprises has budgeted sales in units for the next five months as follows:  Past experience has shown that the ending inventory for each month must be equal to 10% of the next month's sales in units.The inventory on May 31 contained 400 units.The company needs to prepare a production budget for the second quarter of the year. The desired ending inventory for August is:
A)720 units 
B)460 units 
C)540 units 
D)380 units

Quizplus · Accepted Answer

Ending inventory for August = 10% of September sales = 10% × 4,600 units = 460 units

Noel Enterprises Has Budgeted Sales in Units for the Next