Willow Valley's April sales forecast projects that 7,000 units will sell at a price of $10.50 per unit.The desired ending inventory is 30% higher than the beginning inventory, which were 1,000 units.Budgeted production in April would be

Question

Quizplus · Accepted Answer

To calculate the budgeted production, we need to calculate the total units needed to meet the desired ending inventory and the units needed to fulfill the sales forecast.

Desired ending inventory = beginning inventory x 1.30 = 1,000 x 1.30 = 1,300 units 
Units needed to fulfill sales forecast = 7,000 units 
Total units needed = desired ending inventory + units needed to fulfill sales forecast = 1,300 + 7,000 = 8,300 units 
However, since there are already 1,000 units in beginning inventory, we only need to produce an additional 7,300 units (8,300 -1,000) to meet the demand and desired ending inventory. Therefore, option C is the correct answer.

Willow Valley's April Sales Forecast Projects That 7,000 Units Will