Trevor Company expects sales of Product W to be 60,000 units in April, 75,000 units in May, and 70,000 units in June. The company desires that the inventory on hand at the end of each month be equal to 40% of the next month's expected unit sales. Due to excessive production during March, on March 31 there were 25,000 units of Product W in the ending inventory. Given this information, Trevor Company's production of Product W for the month of April should be:

Question

Quizplus · Accepted Answer

To calculate the production for April, we need to consider the sales for April and the desired ending inventory for April. The desired ending inventory for April is 40% of May's sales, which is 0.4 * 75,000 = 30,000 units. The beginning inventory for April is 25,000 units. Therefore, the production needed is April sales (60,000) + desired ending inventory (30,000) - beginning inventory (25,000) = 65,000 units.

Trevor Company Expects Sales of Product W to Be 60,000