Excellent Company manufactures lamps.The estimated number of lamp sales for three months are as follows: Finished goods inventory at the end of July was 3,600 units.Ending finished goods inventory is budgeted as 30% of the next month's sales.Excellent expects to sell the lamps for $30 each.In November, sales are projected at 18,000 lamps.How many lamps should be produced in September?

Question

Excellent Company manufactures lamps.The estimated number of lamp sales for three months are as follows:  Finished goods inventory at the end of July was 3,600 units.Ending finished goods inventory is budgeted as 30% of the next month's sales.Excellent expects to sell the lamps for $30 each.In November, sales are projected at 18,000 lamps.How many lamps should be produced in September?

Quizplus · Accepted Answer

Units to Be Produced = Expected Unit Sales + Units in Desired Ending Inventory (EI) - Units in Beginning Inventory (BI)
Units to Be Produced in September = [16,000 lamps + (15,000 lamps × 0.30) - (16,000 lamps × 0.30)] = 15,700 lamps

Excellent Company Manufactures Lamps