The following forecasted sales pertain to Norah Company: $\begin{array}{lr}
\text { Month } & \text { Sales } \
\hline \text { April } & \$ 200,000 \
\text { May } & 250,000 \
\text { June } & 150,000 \
\text { July } & 100,000
\end{array}$ $\text { Finished goods inventory as of March } 31 \quad\quad\quad 4,000 \text { units }$ The company has a selling price of $10 per unit and expects to maintain ending inventories equal to 20 percent of the next month's sales.
How many units are expected to be produced in April?

Question

Quizplus · Accepted Answer

To calculate the expected production in units for April, we first need to determine the required ending inventory for April, which is 20% of May's sales in units. May's sales are $250,000, and with a selling price of $10 per unit, May's sales in units are 25,000 units (250,000 / 10). Therefore, the ending inventory for April should be 20% of 25,000 units, which is 5,000 units. Next, we calculate April's sales in units, which are 20,000 units ($200,000 / $10). To meet April's sales and ending inventory requirements, Norah Company needs to have a total of 25,000 units available (20,000 units for sales + 5,000 units for ending inventory). Given that the beginning inventory for April is 4,000 units, the company needs to produce 21,000 units (25,000 units required - 4,000 units beginning inventory) in April.

The Following Forecasted Sales Pertain to Norah Company Finished goods inventory as of March 314,000 units \text { Finished goods inventory as of March } 31 \quad\quad\quad 4,000 \text { units } Finished goods inventory as of March 314,000 units

The Following Forecasted Sales Pertain to Norah Company $\text { Finished goods inventory as of March } 31 \quad\quad\quad 4,000 \text { units }$