Question

Jolly Company wants to have​ 10% of the next​ quarter's sales in units on hand at the end of each quarter. Inventory at the beginning of the year was​ 3,800 hula hoops. How many hula hoops should Jolly Company produce during the first​ quarter?

Answer 1

A. 29,100 units

Step-by-step explanation:

The computation of the number of hula hoops produced during the first year is shown below:

Production = Budgeted sales + budgeted desired inventory - budgeted beginning inventory

where,

Budgeted sales = 23,900

Budgeted desired inventory = 90,000 × 10% = 9,000

And, budgeted beginning inventory = 3,800

So the number of hula hoops is

= 23,900 units + 9,000 units - 3,800 units

= 29,100 units