Meadow Company produces hand tools.A sales budget for the next four months is as follows: March 10,000 units,April 13,000,May 16,000 and June 21,000.Meadow Company's ending finished goods inventory policy is 10% of the following month's sales.March 1 inventory is projected to be 1,400 units.How many units will be produced in April?

Question

Quizplus · Accepted Answer

The correct answer is A.The ending finished goods inventory for March is 1,600 units (10% of April's sales of 16,000 units). Therefore, the total units that need to be produced in April are 13,300 units (16,000 units - 1,600 units + 1,400 units).

Meadow Company Produces Hand Tools