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 (50,000) and the desired ending inventory for February, which is 25% of March sales (60,000 * 0.25 = 15,000). The beginning inventory for February is the ending inventory from January, which is 25% of February sales (50,000 * 0.25 = 12,500). Therefore, the production for February is: 50,000 (sales) + 15,000 (desired ending inventory) - 12,500 (beginning inventory) = 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 $\begin{array} { l l } \text { January } & 40,000 \\\text { February } & 50,000 \\\text { March } & 60,000\end{array}$