Tunstall Manufacturing sells medical supplies,including stethoscopes.At 30 September,the company had 1000 stethoscopes in inventory.The company's policy is to maintain an inventory equal to 8 per cent of next month's sales.The company expects the following sales activity for the fourth quarter of the year:
$\begin{array}{ll}
\text { October } & 11000 \text { stethoscopes } \
\text { November } & 15000 \text { stethoscopes } \
\text { December } & 14000 \text { stethoscopes }
\end{array}$

In addition,January sales for the following year are projected to be 16 000 stethoscopes.What is the total required production for the fourth quarter?

Question

Tunstall Manufacturing sells medical supplies,including stethoscopes.At 30 September,the company had 1000 stethoscopes in inventory.The company's policy is to maintain an inventory equal to 8 per cent of next month's sales.The company expects the following sales activity for the fourth quarter of the year:
$\begin{array}{ll}
\text { October } & 11000 \text { stethoscopes } \
\text { November } & 15000 \text { stethoscopes } \
\text { December } & 14000 \text { stethoscopes }
\end{array}$

In addition,January sales for the following year are projected to be 16 000 stethoscopes.What is the total required production for the fourth quarter?

Quizplus · Accepted Answer

The correct answer is A.The company's policy is to maintain an inventory equal to 8 per cent of next month's sales. The company expects sales of 11000 stethoscopes in October, 15000 stethoscopes in November, and 14000 stethoscopes in December. Therefore, the company will need to have an inventory of 11000 * 0.08 = 880 stethoscopes at the end of October, 15000 * 0.08 = 1200 stethoscopes at the end of November, and 14000 * 0.08 = 1120 stethoscopes at the end of December. The company has 1000 stethoscopes in inventory at the beginning of October. Therefore, the company will need to produce 880 + 1200 + 1120 - 1000 = 40280 stethoscopes in the fourth quarter.

Tunstall Manufacturing Sells Medical Supplies,including Stethoscopes In Addition,January Sales for the Following Year Are Projected to 1000