Swansong plans to sell 10,000 units of a particular product during July,and expects sales to increase at the rate of 10% per month during the remainder of the year.The June 30 and September 30 ending inventories are anticipated to be 1,100 units and 950 units,respectively.On the basis of this information,how many units should Swansong purchase for the quarter ended September 30?

Question

Quizplus · Accepted Answer

To calculate the total units to be purchased during the quarter, we need to calculate the total expected sales for the quarter and subtract the expected ending inventory for the quarter. The expected sales for the quarter can be determined by applying the given growth rate of 10% per month to the July sales forecast of 10,000 units:

July sales = 10,000
August sales = July sales * (1 + growth rate) = 10,000 * 1.10 = 11,000
September sales = August sales * (1 + growth rate) = 11,000 * 1.10 = 12,100

Total expected sales for the quarter = July sales + August sales + September sales = 33,100

To calculate the units to be purchased, we need to subtract the expected ending inventory at September 30 from the total expected sales for the quarter:

Units to be purchased = Total expected sales for the quarter - Expected ending inventory at September 30
Units to be purchased = 33,100 - 950 = 32,150

Therefore, the best choice is C) 32,950.

Swansong Plans to Sell 10,000 Units of a Particular Product