Question

Zahn Co. predicts sales of 232 units in May and 360 units in June. Each month’s ending inventory should be 25% of the next month’s sales. The April 30 ending finished goods inventory is 85 units. Compute budgeted production (in units) for May.

Answer 1

237 units

Step-by-step explanation:

The number of units produced in May, added to the ending finished goods inventory from April, must equal predicted sales for May plus 25% of predicted sales for June. The budgeted production for May is given by:

`85+n=232+(0.25*360)\\n= 237\ units`

Budgeted production for May is 237 units