The Cardinal Company had a finished goods inventory of 55,000 units on January 1. Its projected sales for the next four months were: January - 200,000 units; February - 180,000 units; March - 210,000 units; and April - 230,000 units. The Cardinal Company wishes to maintain a desired ending finished goods inventory of 20% of the following months sales. What would be the budgeted production for February?

Question

Quizplus · Accepted Answer

To calculate the budgeted production for February, we need to consider the desired ending inventory for February, which is 20% of March's sales (210,000 units), equaling 42,000 units. The beginning inventory for February is the ending inventory from January, which is 20% of February's sales (180,000 units), equaling 36,000 units. The formula for production is: February sales (180,000) + desired ending inventory (42,000) - beginning inventory (36,000) = 186,000 units.

The Cardinal Company Had a Finished Goods Inventory of 55,000