Ray Company's projected sales budget for the next four months is as follows: Beginning inventory for the year is 27,000 units. Ending inventory for each month should be 30% of the next month's sales.
How many units need to be available for sale in February?

Question

Quizplus · Accepted Answer

To calculate the required units available for sale in February, we need to first calculate the sales forecast for February:

Sales Forecast for February = 48,000 + 54,000 + 72,000 = 174,000

Next, we need to calculate the desired ending inventory for February:

Desired Ending Inventory for February = 30% of March's Sales Forecast = 30% of 60,000 = 18,000

Now we can calculate the units that need to be available for sale in February:

Units Available for Sale in February = Beginning Inventory + February Sales Forecast - Desired Ending Inventory
= 27,000 + 174,000 - 18,000 
= 183,000

Therefore, the best choice is B) 106,500.

Ray Company's Projected Sales Budget for the Next Four Months