Harris Inc. ,has budgeted sales in units for the next five months as follows: Past experience has shown that the ending inventory for each month should be equal to 20% of the next month's sales in units.The inventory on May 31 contained 1,880 units.The company needs to prepare a production budget for the next five months. The beginning inventory for September should be:

Question

Harris Inc. ,has budgeted sales in units for the next five months as follows:  Past experience has shown that the ending inventory for each month should be equal to 20% of the next month's sales in units.The inventory on May 31 contained 1,880 units.The company needs to prepare a production budget for the next five months. The beginning inventory for September should be:

Quizplus · Accepted Answer

Beginning inventory for September = Ending inventory for August = 20% of September's sales
= 20% × 5,400 units = 1,080 units