Watson Corporation manufactures boxes. The estimated numbers of boxes sold for the first three months of 2014 are as follows: $\begin{array}{ll}
\text { Month } & \text { Sales } \
\text { January } & 3,000 \
\text { February } & 4,200 \
\text { March } & 3,900
\end{array}$ Finished goods inventory at the end of December was 600 units. Ending finished goods inventory is equal to 20% of the next month's sales. Watson Corporation expects to sell the boxes for $5 each. April 2014 sales are projected at 4,500 boxes. How many boxes should be produced in February?

Question

Quizplus · Accepted Answer

To calculate the production for February, we need to consider the ending inventory for February, which should be 20% of March's sales (3,900 boxes), equal to 780 boxes. The beginning inventory for February is the ending inventory of January, which is 20% of February's sales (4,200 boxes), equal to 840 boxes. Therefore, the production needed for February is calculated as follows: February sales (4,200) + Ending inventory for February (780) - Beginning inventory for February (840) = 4,140 boxes.

Watson Corporation Manufactures Boxes Month Sales January 3,000 February 4,200 March 3,900\begin{array}{ll}\text { Month } & \text { Sales } \\\text { January } & 3,000 \\\text { February } & 4,200 \\\text { March } & 3,900\end{array} Month January February March ​ Sales 3,0004,2003,900​

Watson Corporation Manufactures Boxes $\begin{array}{ll}\text { Month } & \text { Sales } \\\text { January } & 3,000 \\\text { February } & 4,200 \\\text { March } & 3,900\end{array}$