To compute the number of units to be produced in June, we need to calculate the desired ending inventory for June and subtract it from the estimated June sales.
Let's break it down step by step:
1. Calculate the desired ending inventory for June:
June sales: 296,000 units
Desired ending inventory: 10% of June sales = 10% of 296,000 = 29,600 units
2. Calculate the number of units to be produced in June:
Desired production = Estimated June sales - Desired ending inventory
Desired production = 296,000 - 29,600 = 266,400 units
Therefore, Trago Company needs to produce 266,400 units in June to maintain their JIT policy with an ending inventory equal to 10% of the next month's sales.