Final answer:
The correct answer is a. 5,745 units.
Doe Manufacturing should produce 5,745 units in June, accounting for expected sales and maintaining a 15% inventory to meet the next month's demand.
Step-by-step explanation:
To determine how many units Doe Manufacturing should produce during June, we need to consider both the sales forecast for June and the inventory requirement for July. According to the inventory policy, the company maintains ending inventory equal to 15% of the next month's sales. The company expects to sell 5,700 units in June and 6,000 units in July.
The required ending inventory for June, to prepare for July sales, is 15% of July's expected sales (6,000 units), which equals 900 units (0.15 × 6,000). Therefore, the total number of units needed for June equals the sum of June sales and the necessary inventory for July minus the beginning inventory (which is the ending inventory of May).
The company plans to sell 6,000 units in May, so the ending inventory for May (which is the beginning inventory for June) is 15% of June's expected sales, which is 855 units (0.15 × 5,700).
To find out the production for June, we use the following calculation: June sales (5,700 units) + Ending inventory for June (900 units) - Beginning inventory for June (855 units) = 5,745 units.
Therefore, the correct answer is a. 5,745 units.