A company has a sales forecast for the following five months as shown in the table. If they have a beginning inventory of 350 units, what amount should be produced under a level plan in order for them to have an ending inventory of zero units at the end of the five-month period? $$\begin{array} { | l | c | }
\hline { \text { Month } } & \text { Forecast } \
\hline \text { Tanuary } & 525 \
\hline \text { February } & 600 \
\hline \text { March } & 650 \
\hline \text { April } & 750 \
\hline { \text { May } } & 875 \
\hline
\end{array}$$
A)580 units per month
B)595 units per month
C)610 units per month
D)640 units per month

Question

A company has a sales forecast for the following five months as shown in the table. If they have a beginning inventory of 350 units, what amount should be produced under a level plan in order for them to have an ending inventory of zero units at the end of the five-month period? $$\begin{array} { | l | c | } 
\hline  { \text { Month } } & \text { Forecast } \
\hline \text { Tanuary } & 525 \
\hline \text { February } & 600 \
\hline \text { March } & 650 \
\hline \text { April } & 750 \
\hline  { \text { May } } & 875 \
\hline
\end{array}$$
A)580 units per month
B)595 units per month
C)610 units per month
D)640 units per month

Quizplus · Accepted Answer

To find the total amount to be produced, add the forecasted sales for each month and subtract the beginning inventory, then divide by 5 months. The total forecasted sales are $525 + 600 + 650 + 750 + 875 = 3400$ units. Subtracting the beginning inventory of 350 units gives $3400 - 350 = 3050$ units. Dividing by 5 months gives $3050 / 5 = 610$ units per month.

A Company Has a Sales Forecast for the Following Five