Totz Company produces jump ropes. Totz Company has the following sales projections for the upcoming year: Inventory at the beginning of the year was 4500 jump ropes. Totz Company wants to have 20% of the next quarter's sales in units on hand at the end of each quarter. How many jump ropes should Totz Company produce during the first quarter?

Question

Totz Company produces jump ropes. Totz Company has the following sales projections for the upcoming year:  Inventory at the beginning of the year was 4500 jump ropes. Totz Company wants to have 20% of the next quarter's sales in units on hand at the end of each quarter. How many jump ropes should Totz Company produce during the first quarter?

Quizplus · Accepted Answer

To determine how many jump ropes Totz Company needs to produce during the first quarter, we need to first calculate the projected sales for the first quarter.

Projected sales for the first quarter = (30% x 70,000) / 4 
= 6,150

Next, we need to calculate how many jump ropes Totz Company needs to have on hand at the end of the first quarter.

Jump ropes on hand at the end of the first quarter = 20% x 6,150 
= 1,230

Now, we can calculate the total number of jump ropes that Totz Company needs to have at the end of the first quarter (inventory + jump ropes on hand).

Total jump ropes needed at the end of the first quarter = 4500 + 1230 
= 5730

Since Totz Company wants to have 20% of the next quarter's sales in units on hand at the end of each quarter, the number of jump ropes they need to produce during the first quarter is:

Total jump ropes needed for the second quarter = 20% x (30% x 70,000) = 4,200

Total jump ropes needed at the end of the second quarter = 4,200 + 5730 = 9,930

Therefore, Totz Company needs to produce:

9,930 - 4,500 (current inventory) = 5,430 jump ropes during the first quarter.

The closest option is C) 16,500.

Totz Company Produces Jump Ropes