Sawyer Inc.plans to sell 75,000 units in September and 165,000 units in October.Sawyer's policy is to keep 25% of the next month's sales in ending inventory.If the ending inventory in August was consistent with this policy,how many units should be produced in September?

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Quizplus · Accepted Answer

To calculate the production for September, we need to consider the desired ending inventory for September (which is 25% of October's sales) and adjust for the beginning inventory (which is the ending inventory of August, also set to meet the policy of 25% of September's sales). 1. Desired ending inventory for September = 25% of October's sales = 25% * 165,000 = 41,250 units.2. Beginning inventory for September (which is the ending inventory of August) = 25% of September's sales = 25% * 75,000 = 18,750 units.To meet September's sales and have the desired ending inventory, Sawyer Inc. needs to have:- Units needed for sales in September = 75,000 units (planned sales)- Plus desired ending inventory for September = 41,250 units- Minus beginning inventory for September = 18,750 unitsSo, the total units to be produced in September = 75,000 + 41,250 - 18,750 = 97,500 units.