Question

Seguin Inc. has the following projected unit sales for the first four months of the year: Month Unit Sales January 225,280 February 211,200 March 281,600 April 337,920 Company policy is to have an ending monthly inventory equal to 5 percent of next month’s estimated sales; however, this criterion was not in effect at the end of the past year. Ending inventory at that time was 15,400 units. Determine the company’s production requirements for each month of the first quarter of the year. January February March

Answer 1

To determine the company’s production requirements for each month of the first quarter of the year, calculate the desired ending inventory for each month. Subtract the ending inventory from the projected unit sales to find the production requirement for each month.

Step-by-step explanation:

To determine the company’s production requirements for each month of the first quarter of the year, we need to calculate the desired ending inventory for each month. Since the ending inventory should be 5% of the next month's estimated sales, we can calculate it by multiplying the projected unit sales for the following month by 0.05. Then, subtract the ending inventory from the projected unit sales to find the production requirement for each month.

January: Ending Inventory = February Sales * 0.05
Production Requirement = January Sales - Ending Inventory

Repeating this calculation for February and March will give us the production requirements for each month of the first quarter.