Streeter Company produces plastic microwave turntables. Sales for the next year are expected to be 65,000 units in the first quarter, 72,000 units in the second quarter, 84,000 units in the third quarter, and 66,000 units in the fourth quarter. Streeter maintains a finished goods inventory at the end of each quarter equal to one-half of the units expected to be sold in the next quarter. How many units should Streeter produce in the second quarter?

Question

Quizplus · Accepted Answer

To calculate the production for the second quarter, we need to consider the sales forecast for the second quarter, the desired ending inventory for the second quarter (which is half of the third quarter's sales forecast), and the beginning inventory for the second quarter (which is half of the second quarter's sales forecast). Sales forecast for the second quarter = 72,000 unitsDesired ending inventory for the second quarter = 1/2 * third quarter sales forecast = 1/2 * 84,000 = 42,000 unitsBeginning inventory for the second quarter = 1/2 * second quarter sales forecast = 1/2 * 72,000 = 36,000 unitsTo find out how many units need to be produced, we calculate:Units to be produced = (Sales forecast + Desired ending inventory) - Beginning inventory= (72,000 + 42,000) - 36,000= 114,000 - 36,000= 78,000 units

Streeter Company Produces Plastic Microwave Turntables