Cardinal Company has finished goods inventory of 55,000 units on January 1. Its projected sales for the next four months are: January, 200,000 units; February, 180,000 units; March, 210,000 units; and April, 230,000 units. Cardinal Company wishes to maintain a desired ending finished goods inventory of 20% of the following month's sales.
-The budgeted units of production for March would be

Question

Cardinal Company has finished goods inventory of 55,000 units on January 1. Its projected sales for the next four months are: January, 200,000 units; February, 180,000 units; March, 210,000 units; and April, 230,000 units. Cardinal Company wishes to maintain a desired ending finished goods inventory of 20% of the following month's sales.​
-The budgeted units of production for March would be

Quizplus · Accepted Answer

To calculate the budgeted units of production for March, we first determine the desired ending inventory for March, which is 20% of April's sales (230,000 units * 20% = 46,000 units). Then, we add March's sales (210,000 units) and subtract the beginning inventory for March, which is the desired ending inventory for February (20% of March's sales, 210,000 units * 20% = 42,000 units). The calculation is as follows: (210,000 + 46,000) - 42,000 = 214,000 units.

Cardinal Company Has Finished Goods Inventory of 55,000 Units on January