Walsh 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, Walsh Company's production of Product W
For the month of April should be how many units:

Question

Quizplus · Accepted Answer

April's ending inventory should be 40% of May's expected sales, or 0.40 x 75,000 = 30,000 units. Since the March 31 ending inventory was 25,000 units, production in April must be 30,000 - 25,000 = 5,000 units. Add this to April's expected sales of 60,000 units, and the total units that must be available in April are 65,000 units.

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