Jack is preparing the production budget for Candy Cane Corporation (CCC). Jack determines that the production department generally holds 20% of the following month's budgeted sales in ending inventory each month. From the sales and marketing department, Jack learned that budgeted unit sales for the next 3 months are: January; 1,000 units, February; 1,500 units, and March; 2,500 units. How many units should Jack have the production department produce in February?

Question

Quizplus · Accepted Answer

For February, start with a sales volume of 1,500. Then, add 500 for the target ending inventory. Next, subtract the beginning inventory of 300 for February from the budgeted units to be produced.
See additional explanation below:
 11ee941a_b720_6cf7_bdb6_fdfb81596426_TBW1041_00

Jack Is Preparing the Production Budget for Candy Cane Corporation