Harden, Inc., has budgeted sales in units for the next five months as follows: Past experience has shown that the ending inventory for each month should be equal to 15% of the next month's sales in units. The inventory on May 31 contained 1,050 units. The company needs to prepare a production budget for the next five months.
The beginning inventory for September should be:

Question

Harden, Inc., has budgeted sales in units for the next five months as follows:  Past experience has shown that the ending inventory for each month should be equal to 15% of the next month's sales in units. The inventory on May 31 contained 1,050 units. The company needs to prepare a production budget for the next five months.
The beginning inventory for September should be:

Quizplus · Accepted Answer

Beginning inventory for September = Ending inventory for August = 15% of September's sales = 15% × 6,800 units = 1,020 units