Question

Consider the following time periods:Time Periods..1...2...3...4Sales, in units: 12,000...13,000...15,000...10,000The time periods (quarterly) are for the third year of operations The desired ending inventory is 10% of the budgeted sales in units of the next period. How many units will be produced in the first time period, assuming the beginning inventory of the first time period is based on the desired ending inventory of the previous period?a. 12,100b. 13,300c. 11,900d. 15,500

Answer 1

a. 12,100 units

Explanation:

The computation of the first time period production units are shown below:

= Sale units + ending inventory units - beginning inventory units

where,

Sale units is 12,000 units

Ending inventory units = 13,000 units × 10% = 1,300 units

Beginning inventory units = 12,000 × 10% = 1,200 units

Now put these units to the above formula

So, the units would equal to

= 12,000 units + 1,300 units - 1,200 units

= 12,100 units