Fantastic Futons manufactures futons. The estimated number of futon sales for the first three months of 2010 are as follows:
$\begin{array}{|l|l|}
\hline \text { January } & 40,000 \
\hline \text { February } & 50,000 \
\hline \text { March } & 60,000 \
\hline
\end{array}$
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:
 $\begin{array}{|l|l|}
\hline \text { January } & 40,000 \
\hline \text { February } & 50,000 \
\hline \text { March } & 60,000 \
\hline
\end{array}$
 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 production for February, we consider the sales forecast for March (since 25% of a month's sales are produced the month before) and the sales forecast for February. 25% of March's sales (60,000 units) equals 15,000 units, which are produced in February for March sales. Adding this to the 50,000 units forecasted to be sold in February gives a total of 65,000 units needed. However, we must also account for the 12,500 units (25% of February's sales) produced in January for February sales, reducing the actual production need in February to 52,500 units.

Fantastic Futons Manufactures Futons January 40,000 February 50,000 March 60,000\begin{array}{|l|l|}\hline \text { January } & 40,000 \\\hline \text { February } & 50,000 \\\hline \text { March } & 60,000 \\\hline\end{array} January February March ​40,00050,00060,000​​

Fantastic Futons Manufactures Futons $\begin{array}{|l|l|}\hline \text { January } & 40,000 \\\hline \text { February } & 50,000 \\\hline \text { March } & 60,000 \\\hline\end{array}$