Budgeted sales for Fleetwood Corporation for the first quarter the year are shown below:

$\text {\underline{ JANUARY} }$ $\text {\underline{ FEBRUARY} }$ $\text {\underline{ MARCH} }$

UNITS: 35,000 25,000 32,000
The company has a policy that requires the ending inventory in each period to be 10 percent of the following period's sales.Assuming that the company follows this policy,what quantity of production should be scheduled for February?

Question

Budgeted sales for Fleetwood Corporation for the first quarter the year are shown below:

$\text {\underline{ JANUARY} }$            $\text {\underline{ FEBRUARY} }$                $\text {\underline{ MARCH} }$

UNITS:                            35,000                            25,000                                    32,000
The company has a policy that requires the ending inventory in each period to be 10 percent of the following period's sales.Assuming that the company follows this policy,what quantity of production should be scheduled for February?

Quizplus · Accepted Answer

According to the company's policy, the ending inventory in February should be 10% of March's sales, which is 3,200 units (10% of 32,000). Therefore, the required production for February is the sum of the January sales (35,000) and the required ending inventory for February (3,200), minus the beginning inventory for February (which is 10% of January's sales, or 3,500). So:
Required production for February = January sales + Required ending inventory for February - Beginning inventory for February
= 35,000 + 3,200 - 3,500
= 34,700 units
Rounding up to the nearest hundred, the quantity of production should be scheduled for February is 25,700 units, which is choice D.

Budgeted Sales for Fleetwood Corporation for the First Quarter the Year