Question

Jolly Company produces hula hoops. Jolly Company has the following sales projections for the upcoming year:

First quarter budgeted hula hoop sales in units
23,600
Second quarter budgeted hula hoop sales in units
30,000
Third quarter budgeted hula hoop sales in units
16,000
Fourth quarter budgeted hula hoop sales in units
26, 000
Jolly Company wants to have 20% of the next quarter's sales in units on hand at the end of each quarter. Inventory at the beginning of the year was 4,400 hula hoops. HOW MANY HULA HOOPS SHOULD JOLLY COMPANY PRODUCE DURING THE FIRST QUARTER?"
a) 23,600 hula hoops
b) 31,200 hula hoops
c) 35,840 hula hoops
d) 26,000 hula hoops

Answer 1

After calculating the desired ending inventory for the first quarter and adding the sales projections, then subtracting the beginning inventory, we find that Jolly Company should produce 25,200 hula hoops in the first quarter, which is not listed among the provided options.

Step-by-step explanation:

To determine how many hula hoops Jolly Company should produce during the first quarter, we can follow this process:

1. Calculate the desired ending inventory for the first quarter which is 20% of the second quarter's sales: 0.20 × 30,000 = 6,000 units.
2. Add this to the sales projections for the first quarter: 23,600 + 6,000 = 29,600 units.
3. Subtract the beginning inventory to find how many need to be produced: 29,600 - 4,400 = 25,200 units.

The correct answer is not listed among the options provided, but our calculation shows 25,200 hula hoops should be produced during the first quarter.