Answer the following questions using the information below:
Furniture, Inc., estimates the following number of mattress sales for the first four months of 2012:
Finished goods inventory at the end of December is 3,000 units. Target ending finished goods inventory is 30% of the next month's sales.
-How many mattresses need to be produced in January 2012?

Question

Answer the following questions using the information below:
Furniture, Inc., estimates the following number of mattress sales for the first four months of 2012:
  Finished goods inventory at the end of December is 3,000 units. Target ending finished goods inventory is 30% of the next month's sales.
-How many mattresses need to be produced in January 2012?

Quizplus · Accepted Answer

To calculate the number of mattresses to be produced in January:
Target ending finished goods inventory for February = 0.3 x 12,000 (February sales) = 3,600 units
Therefore, total units needed in February (sales + target ending finished goods inventory) = 12,000 + 3,600 = 15,600 units
To calculate the units needed in January:
Units needed in January = Total units needed in February - Finished goods inventory at the end of December
Units needed in January = 15,600 - 3,000 (given finished goods inventory at the end of December) = 12,600 units
Therefore, Furniture, Inc. needs to produce 11,200 mattresses in January (answer choice B).

Answer the Following Questions Using the Information Below