Question

Houseman, Inc. anticipates sales of 45,000 units, 43,000 units, 46,000 units and 45,000 units in July, August, September and October, respectively. Company policy is to maintain an ending finished-goods inventory equal to 20% of the following month's sales. On the basis of this information, how many units would the company plan to produce in September?

Answer 1

• How many units would the company plan to produce in September?

45,800 Units.

Step-by-step explanation:

Beginning Inventory : 46,000*20% = 9,200

Needed for September : 46,000 - 9,200 = 36,800

Beginning Inventory for October : 45,000*20% = 9,000

The production of September should be: 36,800 + 9,000 = 45.800

The total production of September should be enough to cover the sales of September with a beginning inventory of 9,200 units and leave a beginning inventory to the next month October of 9,000 units.

So the production of September should be 45,800 units.