Bright Lamp Company manufactures lamps. The estimated number of lamp sales for the last three months of 2014 are as follows: $\begin{array}{lc}
\text { Month } & \text { Sales } \
\hline \text { October } & 10,000 \
\text { November } & 14,000 \
\text { December } & 13,000
\end{array}$ Finished goods inventory at the end of September was 3,000 units. Ending finished goods inventory is budgeted to equal 25% of the next month's sales. Bright Lamp expects to sell the lamps for $25 each. January 2015 sales are projected at 16,000 lamps. How many lamps should be produced in November?

Question

Quizplus · Accepted Answer

For November, the production needs to account for November sales, changes in inventory (to meet December's beginning inventory needs), and the inventory at the end of October. The ending inventory for November should be 25% of December's sales (13,000), which is 3,250 lamps. The beginning inventory for November is the ending inventory of October, which needs to be 25% of November's sales (14,000), so 3,500 lamps. Therefore, to find November's production: November sales (14,000) + Ending inventory for November (3,250) - Beginning inventory for November (3,500) = 13,750 lamps.

Bright Lamp Company Manufactures Lamps Finished Goods Inventory at the End of September Was 3,000