Question

Bengal Co. provides the following sales forecast for the next three months: JulyAugustSeptember Sales units 8,500 9,200 5,950 The company wants to end each month with ending finished goods inventory equal to 20% of the next month's sales. Finished goods inventory on June 30 is 1,700 units. The budgeted production units for August are:

Answer 1

Production= 8,550

Step-by-step explanation:

Giving the following information:

Sales units 8,500 9,200 5,950

Desired ending inventory= 20% of the next month's sales.

To calculate the production for August, we need to use the following formula:

Production= sales + desired ending inventory - beginning inventory

Production= 9,200 + (5,950*0.2) - (9,200*0.2)

Production= 9,200 + 1,190 - 1,840

Production= 8,550