Budgeted sales for Parker Corporation for the second quarter the year are shown below:

$\text {\underline{ APRIL} }$ $\text {\underline{ MAY} }$ $\text {\underline{ JUNE} }$

UNITS: 40,000 30,000 38,000

The company has a policy that requires the ending inventory in each period to be 15 percent of the following period's sales.Assuming that the company follows this policy,what quantity of production should be scheduled for May?

Question

Budgeted sales for Parker Corporation for the second quarter the year are shown below:

$\text {\underline{ APRIL} }$                      $\text {\underline{ MAY} }$                                $\text {\underline{ JUNE} }$

UNITS:                            40,000                            30,000                                    38,000

The company has a policy that requires the ending inventory in each period to be 15 percent of the following period's sales.Assuming that the company follows this policy,what quantity of production should be scheduled for May?

Quizplus · Accepted Answer

To calculate the production for May, we need to consider the sales for May and the desired ending inventory for May, which is 15% of June's sales. The ending inventory for April becomes the beginning inventory for May.  - May sales = 30,000 units  - Desired ending inventory for May = 15% of June sales = 0.15 * 38,000 = 5,700 units  - Beginning inventory for May = 15% of May sales = 0.15 * 30,000 = 4,500 units  Production for May = May sales + Desired ending inventory - Beginning inventory = 30,000 + 5,700 - 4,500 = 31,200 units.

Budgeted Sales for Parker Corporation for the Second Quarter the Year