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 beginning inventory is projected to be 1,400 units.How many units will be produced in April?

Question

Quizplus · Accepted Answer

To calculate the units to be produced in April, we need to consider the sales forecast for April, the desired ending inventory for April (which is 10% of May's sales), and the beginning inventory for April (which is the ending inventory of March). 1. April sales forecast: 13,000 units2. Desired ending inventory for April (10% of May's sales): 10% of 16,000 = 1,600 units3. Beginning inventory for April (ending inventory of March, which is 10% of April's sales): 10% of 13,000 = 1,300 unitsThe formula to calculate the production for April is:April production = April sales + Desired ending inventory for April - Beginning inventory for AprilPlugging in the numbers:April production = 13,000 + 1,600 - 1,300 = 13,300 units

Meadow Company Produces Hand Tools