Question

Kenner company produces two products: SR200 and TX500. Budged sales for four months are as follows;

SR200 TX500

May 8,000 20,000

June 13,000 32,000

July 11,000 39,000

August 18,000 46,000



Kenner's ending inventory policy is that SR200 should have 15% of next month's sales in ending inventory and TX500 should have 40% of next months sales in ending Inventory. On May 1, there were 1,200 units of SR200 and 9,000 units of TX500.



TX500 requires 6 units of component A. (SR200 does not use component A.)There were 30,000 units of Component A in inventory on May 1. Kenner wants to have a 20% of the following month's production needs in inventory for component A.



1. How many units of TX500 are budgeted for production in June?

A. 32,000

B. 34,800

C. 47,600

D. 12,800

E. 45,000

Answer 1

The correct answer is B.

Step-by-step explanation:

Giving the following information:

Budgeted production TX500

May 20,000

June 32,000

July 39,000

August 46,000

TX500 should have 40% of next months sales in ending Inventory. On May 1, there were 9,000 units of TX500.

Production for June:

Sales= 32,000 units

Ending inventory= (39,000*0.40)= 15,600

Beginning inventory= (32,000*0.4)= 12,800 (-)

Total= 34,800 units