Sandler Company has 6,000 units in beginning finished goods. The sales budget shows expected sales to be 24,000 units. If the production budget shows that 28,000 units are required for production, what was the desired ending finished goods?

Question

Quizplus · Accepted Answer

To determine the desired ending finished goods, we need to use the following formula:

Desired Ending Finished Goods = Expected Sales - Units Produced

Substituting the given values, we get:

Desired Ending Finished Goods = 24,000 - 28,000

Desired Ending Finished Goods = -4,000

A negative answer doesn't make sense, so we need to adjust our production budget. Since we already have 6,000 units in beginning finished goods, we only need to produce 18,000 units (28,000 - 6,000) to meet the expected sales.

Using the formula again, we get:

Desired Ending Finished Goods = Expected Sales - Units Produced

Desired Ending Finished Goods = 24,000 - 18,000

Desired Ending Finished Goods = 6,000

Therefore, the desired ending finished goods is 6,000 units (Option C).

Sandler Company Has 6,000 Units in Beginning Finished Goods