Question

Walsh Company expects sales of Product W to be 60,000 units in April, 75,000 units in May, and 70,000 units in June. The company desires that the inventory on hand at the end of each month be equal to 40% of the next month's expected unit sales. Due to excessive production during March, on March 31 there were 25,000 units of Product W in the ending inventory. Given this information, Walsh Company's production of Product W for the month of April should be:

Answer 1

65,000 units

Step-by-step explanation:

The computation of the production for the month of April is shown below:

= April units + Next month percentage × May sales - Ending inventory units

= 60,000 units + 0.40 × 75,000 units - 25,000 units

= 60,000 units + 30,000 units - 25,000 units

= 65,000 units

We simply added the April units and the may sales by considering the next month percentage and deduct the ending inventory units so that the production units for April month could come