From Pickwell's sales budget, the budgeted sales volume for the month of January and February is 25,000 units and 35,000 units respectively. Sam, the production head of the Pickwell, decided that the ending inventory quantity should be 10% of the next month's sale. Based on the given information, how many units are expected to be produced in January?

Question

Quizplus · Accepted Answer

Expected Number of Units to be Produced = Budgeted Sales Volume + Budgeted Ending Inventory F1F1F1S1?F1F1F10 Budgeted Beginning Inventory
Budgeted Sales Volume = 25,000 units
Budgeted Ending Inventory = 10% of the next month sale i.e. 3,500 units (10% of 35,000)
Budgeted Beginning Inventory = 10% of current month sale i.e. 2,500 units (10% of 25,000), because the ending inventory for the previous month will be the beginning inventory for the current month. And, the ending inventory for December is 10% of the sales for January, and the ending inventory for December will be the beginning inventory for January.
Budgeted Number of Units to be Produced = 25,000 + 3,500 F1F1F1S1?F1F1F10 2,500 = 26,000

From Pickwell's Sales Budget, the Budgeted Sales Volume for the Month