Coleman,Inc.anticipates sales of 50,000 units,48,000 units,and 51,000 units in July,August,and September,respectively.Company policy is to maintain an ending finished-goods inventory equal to 40% of the following month's sales.On the basis of this information,how many units would the company plan to produce in August?

Question

Quizplus · Accepted Answer

To calculate the production level for August, we need to first determine the ending inventory for July.

Ending inventory for July = 40% of August sales = 0.4 x 48,000 = 19,200 units

Now we can calculate the production level for August:

Production for August = Desired sales for August + Ending inventory for July - Beginning inventory for August 
      
Production for August = 48,000 + 19,200 - 0 
      
Production for August = 49,200 units

Therefore, the company would plan to produce 49,200 units in August.