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Innovative Inc. budgets 250,000 pair of flip flops sales in January. Desired ending inventory for each month is 5% of the following month's budgeted sales. Assume budgeted unit sales increases by 15% every month and that all units placed into production are completed during the month.
-If Innovative Inc.'s ending inventory in December conforms to the desired ending inventory, how many pair of flip flops must be produced to meet budgeted unit sales for January?

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Innovative Inc. budgets 250,000 pair of flip flops sales in January. Desired ending inventory for each month is 5% of the following month's budgeted sales. Assume budgeted unit sales increases by 15% every month and that all units placed into production are completed during the month.
-If Innovative Inc.'s ending inventory in December conforms to the desired ending inventory, how many pair of flip flops must be produced to meet budgeted unit sales for January?

Quizplus · Accepted Answer

To meet January's budgeted sales of 250,000 pairs and maintain a 5% ending inventory for February (which is 15% higher than January's sales, making it 287,500 pairs), Innovative Inc. needs to produce 250,000 pairs for sales plus 5% of February's sales (14,375 pairs) as ending inventory, totaling 264,375 pairs. However, the question asks for the production required to meet January's sales, not including the additional inventory for February. Therefore, the correct answer is not provided in the options, indicating a mistake in the question or the interpretation. The closest answer by the given logic would be A) 251,875 pairs, assuming a misunderstanding in the calculation process.

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