Fantastic Futons manufactures futons.The estimated number of futon sales for the first three months of 2014 are as follows: Finished goods inventory at the end of 2013 was 10,000 units.On average,25 percent of the futons to be sold in the next month are produced and kept as ending balance in finished goods inventory.The planned selling price is $150 per unit.

-How many futons are budgeted to be produced in January by Fantastic Futons?

Question

Fantastic Futons manufactures futons.The estimated number of futon sales for the first three months of 2014 are as follows:

Finished goods inventory at the end of 2013 was 10,000 units.On average,25 percent of the futons to be sold in the next month are produced and kept as ending balance in finished goods inventory.The planned selling price is $150 per unit.

-How many futons are budgeted to be produced in January by Fantastic Futons?

-How many futons are budgeted to be produced in January by Fantastic Futons?

Quizplus · Accepted Answer

To calculate the number of futons to be produced in January, we need to first calculate the desired ending inventory for January.

Desired Ending Inventory for January = 25% of February Sales + January Sales - January Beginning Inventory

25% of February Sales = 0.25 * 35,000 = 8,750
January Sales = 20,000
January Beginning Inventory = 10,000

Therefore, Desired Ending Inventory for January = 8,750 + 20,000 - 10,000 = 18,750

Now, we can calculate the number of futons to be produced in January:

Futons to be Produced in January = January Sales + Desired Ending Inventory for January - January Beginning Inventory
= 20,000 + 18,750 - 10,000
= 28,750

Therefore, the answer is choice (C) 42,500.

Fantastic Futons Manufactures Futons