Question

ABC Company’s budgeted sales for June, July, and August are 14,800, 18,800, and 16,800 units, respectively. ABC requires 30% of the next month’s budgeted unit sales as finished goods inventory each month. Budgeted ending finished goods inventory for May is 4,440 units.

Required: Calculate the number of units to be produced in June and July.

Answer 1

To calculate the number of units to be produced in June and July, consider the budgeted sales and desired finished goods inventory. In June, 20,440 units need to be produced and in July, 23,840 units need to be produced.

Step-by-step explanation:

To calculate the number of units to be produced in June and July, we need to consider ABC Company's budgeted sales and desired finished goods inventory. In June, the budgeted sales are 14,800 units. ABC requires 30% of the next month's budgeted sales as finished goods inventory. So, the desired finished goods inventory for July would be 30% of 18,800 units, which is 5,640 units. Therefore, the number of units to be produced in June would be the sum of June sales (14,800 units) and desired finished goods inventory for July (5,640 units), which is 20,440 units.

In July, the budgeted sales are 18,800 units. Following the same logic, the desired finished goods inventory for August would be 30% of 16,800 units, which is 5,040 units. Therefore, the number of units to be produced in July would be the sum of July sales (18,800 units) and desired finished goods inventory for August (5,040 units), which is 23,840 units.

Answer 2

The number of units to be produced in June and July is 16,000 units and $18,200 respectively

Step-by-step explanation:

The computations are shown below:

Number of units produced in June

= Sale units + ending inventory units - beginning inventory units

where,

Sale units is 14,800 units

Ending inventory units = 18,800 units × 30% = 5,640 units

Beginning inventory units = 4,440 units

Now put these units to the above formula

So, the units would equal to

= 14,800 units + 5,640 units - 4,440 units

= 16,000 units

Number of units produced in June

= Sale units + ending inventory units - beginning inventory units

where,

Sale units is 18,800

Ending inventory units = 16,800 units × 30% = 5,040 units

Beginning inventory units = 18,800 units × 30% = 5,640 units

Now put these units to the above formula

So, the units would equal to

= 18,800 units + 5,040 units - 5,640 units

= 18,200 units