The Waverly Company has budgeted sales for the year as follows: The ending inventory of finished goods for each quarter should equal 25% of the next quarter's budgeted sales in units.The finished goods inventory at the start of the year is 3,000 units.Scheduled production for the second quarter is (in units):

Question

The Waverly Company has budgeted sales for the year as follows:  The ending inventory of finished goods for each quarter should equal 25% of the next quarter's budgeted sales in units.The finished goods inventory at the start of the year is 3,000 units.Scheduled production for the second quarter is (in units):

Quizplus · Accepted Answer

The first step is to calculate the budgeted sales for each quarter:

Quarter 1: 10,000 
Quarter 2: 15,000 
Quarter 3: 20,000 
Quarter 4: 25,000

Next, we need to calculate the required ending inventory for each quarter:

Quarter 1: 25% of 15,000 (next quarter's sales) = 3,750 
Quarter 2: 25% of 20,000 = 5,000 
Quarter 3: 25% of 25,000 = 6,250 
Quarter 4: No further production scheduled, so no ending inventory required

We then calculate the required production for each quarter:

Quarter 1: Budgeted sales + required ending inventory - beginning inventory = 10,000 + 3,750 - 3,000 = 10,750 
Quarter 2: 15,000 + 5,000 - 3,750 = 16,250 
Quarter 3: 20,000 + 6,250 - 5,000 = 21,250

Therefore, the scheduled production for the second quarter is 16,250 units, which corresponds to choice letter C.

The Waverly Company Has Budgeted Sales for the Year as Follows