Noel Enterprises has budgeted sales in units for the next five months as follows: Past experience has shown that the ending inventory for each month must be equal to 10% of the next month's sales in units.The inventory on May 31 contained 400 units.The company needs to prepare a production budget for the second quarter of the year. The desired ending inventory for August is:

Question

Noel Enterprises has budgeted sales in units for the next five months as follows:  Past experience has shown that the ending inventory for each month must be equal to 10% of the next month's sales in units.The inventory on May 31 contained 400 units.The company needs to prepare a production budget for the second quarter of the year. The desired ending inventory for August is:

Quizplus · Accepted Answer

Ending inventory for August = 10% of September sales = 10% × 4, 600 units = 460 units

Noel Enterprises Has Budgeted Sales in Units for the Next