Fallgatter,Inc.,expects to sell 17,500 units.Each unit requires 3 pounds of direct materials at $12 per pound and 2 direct labor hours at $10 per direct labor hour.The overhead rate is $8 per direct labor hour.The beginning inventories are as follows: direct materials,2,000 pounds; finished goods,2,500 units.The planned ending inventories are as follows: direct materials,5,600 pounds; finished goods,3,000 units. What is the planned production?

Question

Quizplus · Accepted Answer

To calculate the planned production, we need to determine the total units needed, including the desired ending inventory.

Total units needed = Sales forecast + desired ending inventory - beginning inventory

Sales forecast = 17,500 units 
Desired ending inventory = 3,000 units 
Beginning inventory = 2,500 units

Total units needed = 17,500 + 3,000 - 2,500 = 18,000 units

Therefore, the planned production is 18,000 units. The best choice is B.