Furniture, Inc., estimates the following number of mattress sales for the first four months of 2019:

Finished goods inventory at the end of December is 7,000 units. Target ending finished goods inventory is 20% of the next month's sales.
How many mattresses need to be produced in January 2019?

Question

Furniture, Inc., estimates the following number of mattress sales for the first four months of 2019:

Finished goods inventory at the end of December is 7,000 units. Target ending finished goods inventory is 20% of the next month's sales.
How many mattresses need to be produced in January 2019?

Quizplus · Accepted Answer

Number of mattresses to be produced in January = [29,000 units (Estimated sales) + 8,160 units (Budgeted ending inventory for January × 20%) - 7,000 units (Beginning inventory)] = 30,160 mattresses.