Production and sales estimates for March for the Robin Co. are as follows: The number of units expected to be manufactured in March is
A) 24,000
B) 27,000
C) 27,600
D) 21,600

Question

Production and sales estimates for March for the Robin Co. are as follows:  The number of units expected to be manufactured in March is
A) 24,000 
B) 27,000 
C) 27,600 
D) 21,600

Quizplus · Accepted Answer

The given production and sales estimate table shows expected sales of 25,000 units in March, and the company wants to maintain an ending inventory level of 10% of the next month's sales, i.e. 2,500 units (10% of 25,000). Therefore, the total units needed in March are 27,500 (25,000 + 2,500). However, the company already has 900 units in stock (beginning inventory) that can be used towards fulfilling the demand. Hence, the number of units expected to be manufactured in March is 27,600 (27,500 - 900). Thus, option C is the best choice.

Production and Sales Estimates for March for the Robin Co