Question

Terryville Corporation plans to sell 48,000 units of its single product in March. The company has 3,500 units in its March 1 finished-goods inventory and anticipates having 3,100 completed units in inventory on March 31. On the basis of this information, how many units does Terryville plan to produce during March?

Answer 1

Terryville plans to produce 47,600 units in March.

Step-by-step explanation:

First of all, let us lay out the information given clearly:

Projected sales = 48,000 units

Inventory (March 1) = 3,500 units

Inventory (march 31) = 3,100 units.

From the above information, the total units to be produced can be calculated by adding the total projected sales to the ending inventory as follows:

Total projected units to be produced = projected sales + ending inventory

= 48,000 + 3,100 = 51,100 units

However, we are told that the inventory at the beginning of the month of March is 3,500, therefore of the total amounts to be produced, 3,500 units is already available, hence to get the new amount to be produced we will subtract the beginning inventory from the total units planned to be produced.

Total units to be produced = 51,100 - 3,500 = 47,600 units.