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

To calculate the number of futons to be produced in February, consider the sales for February and the desired ending inventory. February sales are 50,000 units. The ending inventory for February should be 25% of March sales, which is 15,000 units (25% of 60,000). The beginning inventory for February is the ending inventory of January, which is 25% of February sales, or 12,500 units (25% of 50,000). Therefore, the production for February is: February sales (50,000) + Ending inventory (15,000) - Beginning inventory (12,500) = 52,500 units.

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