Boxes R Us Corporation manufactures boxes. The estimated number of boxes to be sold for the first three months of the year is as follows: Month Sales
January 3,000
February 4,200
March 3,900
Finished goods inventory at the end of December was 900 units. Ending finished goods inventory is equal to 20% of the next month's sales. The company expects to sell the boxes for $5 each. April sales are projected at 4,500 boxes. How many boxes should be produced in February?

Question

Quizplus · Accepted Answer

To calculate the number of boxes to be produced in February, we need to consider the sales for February and the desired ending inventory for February, which is 20% of March's sales. February sales are 4,200 boxes, and the ending inventory for February should be 20% of March's sales (3,900), which is 780 boxes. The beginning inventory for February is the ending inventory from January, which is 20% of February's sales (4,200), or 840 boxes. Therefore, the production for February is calculated as: February sales (4,200) + Ending inventory for February (780) - Beginning inventory for February (840) = 4,140 boxes.

Boxes R Us Corporation Manufactures Boxes