Canceco Company produces and sells pillows. It expects to sell 10,000 pillows in the year 2005 and had 1,000 pillows in finished goods inventory at the end of 2004. Canceco would like to complete operations in the year 2005 with at least 1,250 completed pillows in inventory. There is no ending work-in-process inventory. The pillows sell for £5 each. How many pillows would be produced in the year 2005?
A) 10,000 pillows
B) 11,000 pillows
C) 11,250 pillows
D) 10,250 pillows

Question

Quizplus · Accepted Answer

To determine the number of pillows that need to be produced in the year 2005, we need to consider the following:

Expected sales in 2005 = 10,000 pillows
Desired ending finished goods inventory = 1,250 pillows
Beginning finished goods inventory = 1,000 pillows

Therefore, the total number of pillows that should be available at the end of 2005 is:

Desired ending finished goods inventory + Expected sales in 2005 = 1,250 pillows + 10,000 pillows = 11,250 pillows

Since there are already 1,000 pillows in finished goods inventory, the number of pillows that need to be produced in 2005 is:

11,250 pillows - 1,000 pillows = 10,250 pillows

Therefore, the best answer is D) 10,250 pillows.

Canceco Company Produces and Sells Pillows