Detmer Enterprises has budgeted sales for the next five months as follows: Past experience has shown that the ending inventory for each month should be equal to 10% of the next month's sales in units. The inventory on December 31 contained 400 units, which was in excess of the desired level of inventory. The company needs to prepare a Production Budget for the first quarter of the year.
-The total number of units needed (i.e., unit sales plus desired ending inventory) in March is:

Question

Detmer Enterprises has budgeted sales for the next five months as follows:  Past experience has shown that the ending inventory for each month should be equal to 10% of the next month's sales in units. The inventory on December 31 contained 400 units, which was in excess of the desired level of inventory. The company needs to prepare a Production Budget for the first quarter of the year.
-The total number of units needed (i.e., unit sales plus desired ending inventory) in March is:

Quizplus · Accepted Answer

The total number of units needed is calculated by adding the unit sales for March to the desired ending inventory for March. The correct calculation results in 6,120 units.

Detmer Enterprises Has Budgeted Sales for the Next Five Months