The Colson Company has budgeted sales for the year as follows:
$$\begin{array} { | l | l | l | l | l | }
\hline \text { Quarter } & 1 & 2 & 3 & 4 \
\hline \text { Sales in units } & 12,000 & 14,000 & 18,000 & 16,000 \
\hline
\end{array}$$
The ending inventory of finished goods for each quarter should equal 25% of the next quarter's budgeted sales in units. The finished goods inventory at the start of the year is 3,000 units.
-Scheduled production for the third quarter is (in units)

Question

The Colson Company has budgeted sales for the year as follows:
$$\begin{array} { | l | l | l | l | l | } 
\hline \text { Quarter } & 1 & 2 & 3 & 4 \
\hline \text { Sales in units } & 12,000 & 14,000 & 18,000 & 16,000 \
\hline
\end{array}$$
The ending inventory of finished goods for each quarter should equal 25% of the next quarter's budgeted sales in units. The finished goods inventory at the start of the year is 3,000 units. 
-Scheduled production for the third quarter is (in units)

Quizplus · Accepted Answer

To calculate the scheduled production for the third quarter, we need to consider the desired ending inventory for the third quarter and the beginning inventory for the third quarter. The ending inventory for the third quarter should be 25% of the fourth quarter's sales, which is 25% of 16,000 = 4,000 units. The beginning inventory for the third quarter is the ending inventory of the second quarter, which is 25% of the third quarter's sales, or 25% of 18,000 = 4,500 units. Therefore, the scheduled production for the third quarter is: 18,000 (sales) + 4,000 (desired ending inventory) - 4,500 (beginning inventory) = 17,500 units.

The Colson Company Has Budgeted Sales for the Year as Follows