Question

Ruiz Co. provides the following unit sales forecast for the next three months: January February March Sales units 3,900 5,100 5,900 The company wants to end each month with ending finished goods inventory equal to 10% of the next month’s sales. Finished goods inventory on December 31 is 390 units. The budgeted production units for February are:______________.

Answer 1

5,180 units

Step-by-step explanation:

The computation of the budgeted production units is shown below:

= Sale units + ending inventory units - beginning inventory units

where,

Sale units is 5,100 units

Ending inventory units = 5,900 units × 10% = 590 units

Beginning inventory units = 5,100 × 10% = 510 units

Now put these units to the above formula

So, the units would equal to

= 5,100 units + 590 units - 510 units

= 5,180 units