Fantastic Futons manufactures futons.The estimated number of futon sales for the first three months of 2010 are as follows: $$\begin{array} { l l }
\text { January } & 40,000 \
\text { February } & 50,000 \
\text { March } & 60,000
\end{array}$$ Finished goods inventory at the end of 2009 was 12,000 units.On average,25 percent of the futons are produced during the month before they are sold,which normally accounts for the ending balance in finished goods inventory.The planned selling price is $150 per unit.
How many futons are budgeted to be produced in February?

Question

Fantastic Futons manufactures futons.The estimated number of futon sales for the first three months of 2010 are as follows: $$\begin{array} { l l } 
\text { January } & 40,000 \
\text { February } & 50,000 \
\text { March } & 60,000
\end{array}$$ Finished goods inventory at the end of 2009 was 12,000 units.On average,25 percent of the futons are produced during the month before they are sold,which normally accounts for the ending balance in finished goods inventory.The planned selling price is $150 per unit.
How many futons are budgeted to be produced in February?

Quizplus · Accepted Answer

1. Calculate the estimated sales for the first three months of 2010:
   Jan: 11,000
   Feb: X
   Mar: 15,000

Total estimated sales for the first quarter of 2010: 41,000

2. Calculate the desired ending finished goods inventory:
   25% of March sales = 25% of 15,000 = 3,750

Desired ending finished goods inventory = 3,750

3. Calculate the total production needed for the first quarter of 2010:
   Total estimated sales + desired ending finished goods inventory - beginning finished goods inventory
   41,000 + 3,750 - 12,000 = 32,750

4. Calculate the production needed for February:
   Production needed for the first quarter - production for January - production for March
   32,750 - (11,000 x 25%) - (15,000 x 25%) = 52,500

Therefore, the answer is C) 52,500.

Fantastic Futons Manufactures Futons January 40,000 February 50,000 March 60,000\begin{array} { l l } \text { January } & 40,000 \\\text { February } & 50,000 \\\text { March } & 60,000\end{array} January February March ​40,00050,00060,000​

Fantastic Futons Manufactures Futons $\begin{array} { l l } \text { January } & 40,000 \\\text { February } & 50,000 \\\text { March } & 60,000\end{array}$