Question

Robyn Company produces and sells automobile batteries. The sales forecast for 2019 is as​ follows:

Quarter Batteries​ (in units)
1 ​5,000
2 ​7,000
3 ​8,000
4 ​10,000
The January​ 1, 2019 inventory of batteries is forecasted to be​ 2,000 units. Management desires an ending inventory each quarter equal to​ 40% of the next​ quarter's sales.
Required:
a) What are the budgeted units to produce for the second quarter of​ 2019?

Answer 1

Total= 7,400 units

Step-by-step explanation:

Giving the following information:

Quarter Batteries​ (in units)

1 ​5,000

2 ​7,000

3 ​8,000

4 ​10,000

Management desires an ending inventory each quarter equal to​ 40% of the next​ quarter's sales.

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

Production= sales + desired ending inventory - beginning inventory

2nd Quarter (in units):

Sales= 7,000

Desired ending inventory= (8,000*0.4)= 3,200

Beginning inventory= (7,000*0.4)= (2,800)

Total= 7,400 units