Question

Olympia Productions Inc. makes award medallions that are attached to ribbons. Each medallion requires 18 inches of ribbon. The sales forecast for February is 2,400 medallions. Estimated beginning inventories and desired ending inventories for February are as follows: (Assume 18 inches = 0.5 yards)

Estimated Beginning Inventory Desired Ending Inventory
Medallions 1,100 850
Ribbon (yards) 50 28

Required:
a. Calculate the number of medallions to be produced in February.
b. Calculate the number of yards of ribbon to be purchased in February.

Answer 1

Instructions are below.

Step-by-step explanation:

Giving the following information:

Each medallion requires 0.5 yards of ribbon.

Sales (medallions)

February= 2,400 units

Estimated Beginning Inventory - Desired Ending Inventory

Medallions: 1,100 - 850

Ribbon (yards): 50 - 28

1) To calculate the number of medallions to be produced, we need to use the following formula:

Production= sales + desired ending inventory - beginning inventory

Production= 2,400 + 850 - 1,100= 2,150 medallions

2) To calculate the yards of ribbon to be purchased, we need to use the following formula:

Purchases= production + desired ending inventory - beginning inventory

Purchases= 2,150*0.5 + 28 - 50

Purchases= 1,053 yards