Question

Vineyard Corporation, a manufacturer of fine wines, began the year with 20,000 bottles in inventory. The company estimated the budgeted sales for the four quarters of the current year to be 200,000 bottles, 150,000 bottles, 250,000 bottles, and 400,000 bottles, respectively. The management feels that an ending inventory of 10% of the subsequent quarter's sales is appropriate. What are the production needs for the first quarter

Answer 1

195,000 bottles

Step-by-step explanation:

Given that,

Sales in the first quarter = 200,000 bottles

Sales in the second quarter = 150,000 bottles

Beginning inventory = 20,000 bottles

Production needs for the first quarter:

= Ending inventory + Sales in the first quarter - Beginning inventory

= (10% of the subsequent quarter's sales) + 200,000 bottles - 20,000 bottles

= (150,000 × 10%) + 200,000 bottles - 20,000 bottles

= 15,000 bottles + 200,000 bottles - 20,000 bottles

= 195,000 bottles