Cripe Corporation maintains ending inventory for each month at 5% of the following month's sales. It predicted the following sales (in units) for the first four months of the coming year: How many units should be produced in March?

Question

Cripe Corporation maintains ending inventory for each month at 5% of the following month's sales. It predicted the following sales (in units) for the first four months of the coming year:  How many units should be produced in March?

Quizplus · Accepted Answer

To calculate the units to be produced in March, we need to first calculate the ending inventory for March, which is 5% of the April sales.

Ending inventory for March = 5% of April sales = 5% of 5,700 = 285 units

Total units needed in March = Forecasted sales in March + Ending inventory for March 
= 2,900 + 285 
= 2,990 units

Therefore, the answer is D.

Cripe Corporation Maintains Ending Inventory for Each Month at 5