Bengal Co. provides the following unit sales forecast for the next three months: The company wants to end each month with ending finished goods inventory equal to 25% of the next month's sales. Finished goods inventory on June 30 is 1,250 units. The budgeted production units for July are:
A) 6,250 units.
B) 3,750 units.
C) 6,425 units.
D) 2,500 units.
E) 5,175 units.

Question

Bengal Co. provides the following unit sales forecast for the next three months:  The company wants to end each month with ending finished goods inventory equal to 25% of the next month's sales. Finished goods inventory on June 30 is 1,250 units. The budgeted production units for July are:
A) 6,250 units. 
B) 3,750 units. 
C) 6,425 units. 
D) 2,500 units. 
E) 5,175 units.

Quizplus · Accepted Answer

July units + 25% of August units − June ending inventory = July production
5,000 units + (5,700 units × .25) − 1,250 units = 5,175 units

Bengal Co Provides the Following Unit Sales Forecast for the Next