Houseman, Inc.anticipates sales of 50,000 units, 48,000 units, and 51,000 units in July, August, and September, respectively.Company policy is to maintain an ending ﬁnished-goods inventory equal to 40% of the following month's sales.On the basis of this information, how many units would the company plan to produce in August?

Question

Quizplus · Accepted Answer

The company plans to produce 49,200 units in August. This is because they anticipate sales of 48,000 units in August and they want to maintain an ending finished-goods inventory equal to 40% of the following month's sales, which is 40% of 51,000 units, or 20,400 units. So, they need to produce 48,000 + 20,400 = 49,200 units in August.