Question

Meadow Company produces hand tools. A sales budget for the next four months is as follows: March 10,500 units, April 13,600, May 16,600 and June 21,000. Meadow Company’s ending finished goods inventory policy is 10% of the following month’s sales. March 1 beginning inventory is projected to be 1,050 units. How many units will be produced in March?

Answer 1

Units Produced in the month of March: 10,810 Units

Step-by-step explanation:

Production for the month of march can be estimated using the following formula:

Productions units for the month of March = Projected Sales for the month + 10% of the following months's sales as ending inventory - Opening Inventory

Units Produced for the month Units

Projected Sales for the month 10,500

Add: 10% of the following month's sales as ending inventory 1,360

(13,600 x 10%)

Less: Opening inventory (1,050)

Units produced for the month of March 10,810