Use the information below to answer the following questions.
Patiomaster Products manufactures patio furniture. The estimated numbers of sets to be sold for the last three months of 2015 is:
$\begin{array}{lr}\text { Month}&\text { Sales }\
\text { October } & 10,000 \
\text { November } & 7,000 \
\text { December } & 5,000 \
\text { Tanuary } & 6,000
\end{array}$ Finished goods inventory at the end of September is 2,000 units. Finished goods inventory is set at 20 percent of next month's sales.
-Refer to the table above.What will be the amount of total production for October 2015?

Question

Use the information below to answer the following questions.
Patiomaster Products manufactures patio furniture. The estimated numbers of sets to be sold for the last three months of 2015 is:
 $\begin{array}{lr}\text { Month}&\text {  Sales }\
\text { October } & 10,000 \
\text { November } & 7,000 \
\text { December } & 5,000 \
\text { Tanuary } & 6,000
\end{array}$ Finished goods inventory at the end of September is 2,000 units. Finished goods inventory is set at 20 percent of next month's sales.
-Refer to the table above.What will be the amount of total production for October 2015?

Quizplus · Accepted Answer

Finished goods inventory is set at 20 percent of next month's sales. So, the desired ending inventory for October is 20% of November's sales, or 1,400 units (7,000 * 0.20). The beginning inventory for October is 2,000 units. So, the total production for October must be 10,000 (October's sales) + 1,400 (desired ending inventory) - 2,000 (beginning inventory) = 9,400 units.

Use the Information Below to Answer the Following Questions Finished Goods Inventory at the End of September Is 2,000