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 August are:
A) 6,950 units.
B) 4,310 units.
C) 7,090 units.
D) 5,665 units.
E) 4,135 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 August are:
A) 6,950 units. 
B) 4,310 units. 
C) 7,090 units. 
D) 5,665 units. 
E) 4,135 units.

Quizplus · Accepted Answer

August units + 25% of September units − July ending inventory = August production
5,700 units + (5,560 units × .25) − (5,700 × .25) = 5,665 units
5,700 + 1,390 − 1,425 = 5,665 units

Bengal Co Provides the Following Unit Sales Forecast for the Next