Question

quantum canyon budgets 27,500 units for sales and produces 30,000 units. if quantum canyon wants to end the month with 9,250 units of ending inventory, how many units are in beginning inventory?

Answer 1

The beginning inventory for Quantum Canyon is 6,750 units, calculated using the inventory equation by adjusting for production, sales, and desired ending inventory.

Step-by-step explanation:

To determine the beginning inventory, we use the basic inventory equation which is:

Beginning Inventory + Production - Sales = Ending Inventory

We are given that the expected sales are 27,500 units and production is 30,000 units. Quantum Canyon desires an ending inventory of 9,250 units. Plugging these into the equation, we get:

Beginning Inventory + 30,000 - 27,500 = 9,250

From that, we calculate:

Beginning Inventory = 9,250 + 27,500 - 30,000

Beginning Inventory = 6,750 units

Understanding inventory management is crucial in business, especially in maintaining the right balance of stock to avoid excess or shortage which could lead to business inefficiencies or disruptions. Accurate calculation of beginning inventory ensures that the financial records reflect actual business activities and inform better decision making for future inventory planning and sales strategies.