ABC Co.has forecasted June sales of 600 units and July sales of 900 units.The company maintains ending inventory equal to 130% of next month's sales.June beginning inventory reflects this policy.What is June's required production?

Question

Quizplus · Accepted Answer

June's required production can be calculated as follows:

June required production = June sales forecast + June ending inventory - June beginning inventory

June ending inventory = 130% of July sales forecast = 1.3 x 900 = 1170 units

June beginning inventory = June ending inventory of 1170 units

June required production = 600 + 1170 - 1170 = 990 units

Therefore, the best choice is A) 990 units.

ABC CoHas Forecasted June Sales of 600 Units and July Sales