Next year's sales forecast shows that 20,000 units of Product A and 22,000 units of Product B are going to be sold for prices of $10 and $12 per unit, respectively. The desired ending inventory of Product A is 20% higher than its beginning inventory of 2,000 units. The beginning inventory of Product B is 2,500 units. The desired ending inventory of Product B is 3,000 units.
-Heedy Company is trying to decide how many units of merchandise to produce each month. The company policy is to have 20% of the next month's sales in inventory at the end of each month. Projected sales for August, September, and October are 30,000 units, 20,000 units, and 40,000 units, respectively. The number of units that must be produced in September is

Question

Quizplus · Accepted Answer

The correct answer is A because the number of units that must be produced in September is 24,000 units. This is calculated by taking the projected sales for September (20,000 units) and adding 20% of the next month's sales (40,000 units * 0.20 = 8,000 units). This gives a total of 28,000 units that need to be available in September. Since the beginning inventory is 2,500 units and the desired ending inventory is 3,000 units, the number of units that must be produced in September is 28,000 - 2,500 - 3,000 = 24,000 units.

Next Year's Sales Forecast Shows That 20,000 Units of Product