Roberts Enterprises has budgeted sales in units for the next five months as follows:$\begin{array} {| l | r | }
\hline \text { June } & 4,500 \text { units } \
\hline \text { July } & 7,100 \text { units } \
\hline \text { August } & 5,300 \text { units } \
\hline \text { September } & 6,700 \text { units } \
\hline \text { October } & 3,700 \text { units } \
\hline
\end{array}$Past experience has shown that the ending inventory for each month must be equal to 10% of the next month's sales in units. The inventory on May 31 contained 410 units. The company needs to prepare a production budget for the second quarter of the year.

-What is the opening inventory in units for September?

Question

Roberts Enterprises has budgeted sales in units for the next five months as follows:$\begin{array} {| l | r | } 
\hline \text { June } & 4,500 \text { units } \
\hline \text { July } & 7,100 \text { units } \
\hline \text { August } & 5,300 \text { units } \
\hline \text { September } & 6,700 \text { units } \
\hline \text { October } & 3,700 \text { units } \
\hline
\end{array}$Past experience has shown that the ending inventory for each month must be equal to 10% of the next month's sales in units. The inventory on May 31 contained 410 units. The company needs to prepare a production budget for the second quarter of the year.

-What is the opening inventory in units for September?

Quizplus · Accepted Answer

The opening inventory for September must be 10% of October's sales, which is 10% of 3,700 units = 370 units. However, the question asks for the opening inventory in units for September, which is actually the ending inventory of August. Since the ending inventory for each month is 10% of the next month's sales, the ending inventory for August (and thus the opening inventory for September) is 10% of September's sales, which is 10% of 6,700 units = 670 units.

Roberts Enterprises Has Budgeted Sales in Units for the Next