The Waverly Company has budgeted sales for next year as follows: $$\begin{array} { | c | l | l | l | l | }
\hline \text { Quarter } & \text { First } & \text { Second } & \text { Third } & \text { Fourth } \
\hline \text { Sales in units } & 12,000 & 14,000 & 18,000 & 16,000 \
\hline
\end{array}$$ 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 in units for the third quarter should be:

Question

The Waverly Company has budgeted sales for next year as follows: $$\begin{array} { | c | l | l | l | l | } 
\hline \text { Quarter } & \text { First } & \text { Second } & \text { Third } & \text { Fourth } \
\hline \text { Sales in units } & 12,000 & 14,000 & 18,000 & 16,000 \
\hline
\end{array}$$ 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 in units for the third quarter should be:

Quizplus · Accepted Answer

The ending inventory of finished goods for each quarter should equal 25% of the next quarter's budgeted sales in units. So, the ending inventory for the third quarter should be 25% of the fourth quarter's budgeted sales of 16,000 units, which is 4,000 units. The beginning inventory for the third quarter is the ending inventory for the second quarter, which is 25% of the third quarter's budgeted sales of 18,000 units, which is 4,500 units. Therefore, the scheduled production in units for the third quarter should be 18,000 units (budgeted sales) + 4,000 units (ending inventory) - 4,500 units (beginning inventory) = 17,500 units.

The Waverly Company Has Budgeted Sales for Next Year as Follows