Budgeted sales for Madonna Inc.for the first quarter the year are shown below: $\begin{array}{lr}&\text { JANUARY}&\text {FEBRUARY }&\text {MARCH }\
\text {UNITS: }&35,000&25,000&32,000\
\end{array}$
The company has a policy that requires the ending inventory in each period to be 10 percent of the following period's sales.Assuming that the company follows this policy,what quantity of production should be scheduled for February?

Question

Budgeted sales for Madonna Inc.for the first quarter the year are shown below: $\begin{array}{lr}&\text { JANUARY}&\text {FEBRUARY }&\text {MARCH }\
\text {UNITS: }&35,000&25,000&32,000\
\end{array}$
 The company has a policy that requires the ending inventory in each period to be 10 percent of the following period's sales.Assuming that the company follows this policy,what quantity of production should be scheduled for February?

Quizplus · Accepted Answer

The ending inventory for February should be 10% of March's sales, which is 3,200 units (10% of 32,000). The beginning inventory for February is 2,500 units (10% of February's sales). Therefore, the production for February should be: 25,000 (sales) + 3,200 (desired ending inventory) - 2,500 (beginning inventory) = 25,700 units.

Budgeted Sales for Madonna Inc JANUARYFEBRUARY MARCH UNITS: 35,00025,00032,000\begin{array}{lr}&\text { JANUARY}&\text {FEBRUARY }&\text {MARCH }\\\text {UNITS: }&35,000&25,000&32,000\\\end{array}UNITS: ​ JANUARY35,000​FEBRUARY 25,000​MARCH 32,000​

Budgeted Sales for Madonna Inc $\begin{array}{lr}&\text { JANUARY}&\text {FEBRUARY }&\text {MARCH }\\\text {UNITS: }&35,000&25,000&32,000\\\end{array}$