Use the information below to answer the following question(s).Berry's Boxes manufactures boxes.It expects to sell 20,000 boxes in 2018.The company had enough beginning inventory of direct materials to produce 24,000 units.Beginning inventory of finished units totalled 2,000 with a target ending inventory of 2,500 units.The boxes sell for $3.00 and the company keeps no work-in-process inventory.Direct materials costs for each box total $1.00 while direct labour is $0.50.Factory overhead is $0.20 per box.
-How many boxes should Berry's Boxes produce in 2018?

Question

Quizplus · Accepted Answer

Total boxes needed to meet demand and maintain ending inventory: 
20,000 + 2,500 - 2,000 = 20,500
Since there is enough beginning inventory of direct materials to produce 24,000 units, the company should produce only the additional boxes needed:
24,000 - 20,500 = 3,500
So the total boxes Berry's Boxes should produce in 2018 is:
20,500 + 3,500 = 24,000
Therefore, the answer is D) 20,500 boxes.

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