Paradise Gifts has budgeted sales for the quarter as follows: $$\begin{array} { l l }
\text { January } & 11,000 \text { units } \
\text { February } & 13,000 \text { units } \
\text { March } & 17,000 \text { units }
\end{array}$$ The ending inventory of finished goods each month should equal 25% of the next month's budgeted sales in units.How much is scheduled production for February?

Question

Paradise Gifts has budgeted sales for the quarter as follows: $$\begin{array} { l l } 
\text { January } & 11,000 \text { units } \
\text { February } & 13,000 \text { units } \
\text { March } & 17,000 \text { units }
\end{array}$$ The ending inventory of finished goods each month should equal 25% of the next month's budgeted sales in units.How much is scheduled production for February?

Quizplus · Accepted Answer

To calculate the scheduled production for February, we first determine the desired ending inventory for February, which should be 25% of March's budgeted sales (17,000 units). So, the ending inventory for February should be $17,000 \times 0.25 = 4,250$ units. Next, we calculate the total needed units for February, which includes the sales for February (13,000 units) plus the ending inventory for February (4,250 units), totaling 17,250 units. However, we must also account for the beginning inventory for February, which is the desired ending inventory for January. The ending inventory for January should be 25% of February's budgeted sales (13,000 units), so $13,000 \times 0.25 = 3,250$ units.Therefore, the scheduled production for February is the total needed units (17,250 units) minus the beginning inventory for February (3,250 units), which equals $17,250 - 3,250 = 14,000$ units.

Paradise Gifts Has Budgeted Sales for the Quarter as Follows