Budgeted sales (in units) for the Rockwall Energy Drink Company are as follows: $$\begin{array} { l l }
\text { September } & 45,000 \text { units } \
\text { October } & 60,000 \text { units } \
\text { November } & 40,000 \text { units } \
\text { December } & 75,000 \text { units }
\end{array}$$ The company wishes to have 10% of the next month's sales on hand at the end of each month.How much is budgeted production for November?

Question

Budgeted sales (in units) for the Rockwall Energy Drink Company are as follows: $$\begin{array} { l l } 
\text { September } & 45,000 \text { units } \
\text { October } & 60,000 \text { units } \
\text { November } & 40,000 \text { units } \
\text { December } & 75,000 \text { units }
\end{array}$$ The company wishes to have 10% of the next month's sales on hand at the end of each month.How much is budgeted production for November?

Quizplus · Accepted Answer

For November, the company wants to have 10% of December's sales (75,000 units) on hand at the end of November, which is 7,500 units. The budgeted sales for November are 40,000 units. Therefore, the total requirement for November is 40,000 units (to meet November's sales) + 7,500 units (to meet the inventory requirement for the end of November) = 47,500 units. However, the question asks for the budgeted production for November, not the total requirement. To find the budgeted production, we also need to consider the inventory at the end of October that will be used to meet part of November's requirement. The company wishes to have 10% of November's sales (40,000 units) on hand at the end of October, which is 4,000 units. Assuming this inventory is used first in November, the budgeted production for November would be the total requirement for November (47,500 units) minus the inventory at the end of October (4,000 units), which equals 43,500 units.

Budgeted Sales (In Units) for the Rockwall Energy Drink Company