Question

Answer the following questions using the information below:

Furniture Inc. estimates the following number of mattress sales for the first four months of 2016:

Month Sales
January 22,000
February 30,800
March 28,600
April 35,200

Finished goods inventory at the end of December is 6,600 units. Target ending finished goods inventory is 20% of the next month's sales.

*44) How many mattresses should be produced in the first quarter of 2016?*
A) 88,880 mattresses
B) 81,840 mattresses
C) 60,280 mattresses
D) 51,920 mattresses

Answer 1

To calculate the number of mattresses that should be produced in the first quarter of 2016, we need to calculate the target ending finished goods inventory for each month and sum them up.

Step-by-step explanation:

To calculate the number of mattresses that should be produced in the first quarter of 2016, we need to calculate the target ending finished goods inventory for each month.

The target ending finished goods inventory for each month is 20% of the next month's sales. So, for January, the target ending finished goods inventory is 20% of February's sales. Using this calculation, we can determine the target ending finished goods inventory for each month.

Finally, we sum up the target ending finished goods inventory for each month to get the total number of mattresses that should be produced in the first quarter of 2016.

January target ending finished goods inventory: 20% of 30,800 = 6,160

February target ending finished goods inventory: 20% of 28,600 = 5,720

March target ending finished goods inventory: 20% of 35,200 = 7,040

Total number of mattresses to be produced in the first quarter of 2016: 6,600 + 6,160 + 5,720 + 7,040 = 25,520 mattresses.