Question

Sales for ross pro's sports equipment are expected to be 4,800 units for the coming month. the company likes to maintain 10 percent of unit sales for each month in ending inventory. beginning inventory is 300 units. how many units should the firm produce for the coming month?

Answer 1

Calculation of Budgeted Production for next month:

Budgeted Production can be calculated using the following formula:

Budgeted Production = Budgeted Sales + Budgeted ending inventory – Budgeted Beginning Inventory

We are given that:

Budgeted Sales =4800 units

Budgeted ending inventory = 10 percent of unit sales for each month = 4800*10% = 480 units

Budgeted Beginning Inventory = 300 Units

Now we can calculate:

Budgeted Production = Budgeted Sales + Budgeted ending inventory – Budgeted Beginning Inventory

= 4800+480-300

=4,980 Units

So, the firm should produce 4,980 units for the coming month.