Planning Systems, has forecast the following unit sales and production for the next year, by quarter: A finished unit requires one unit of material A and two units of material B. There should be enough material on hand at the end of each quarter to meet 20% of the next quarter's production needs. There are no work-in-process inventories.
What is the ending inventory for material B in quarter 1?
A) 28
B) 32
C) 56
D) 64

Question

Quizplus · Accepted Answer

To calculate the ending inventory for material B in quarter 1, determine the production needs for quarter 2, multiply by 2 (since each unit requires 2 units of B), and then take 20% of that amount.

Planning Systems, Has Forecast the Following Unit Sales and Production