Question

Orange Corporation has budgeted sales of 23 comma 000 ​units, targeted ending finished goods inventory of 4 comma 000 ​units, and beginning finished goods inventory of 5 comma 000 units. How many units should be produced next​ year?

Answer 1

22000 units

Step-by-step explanation:

The movement in the balance of supplies at the start and end of a period is as a result of usage and purchases. While usage reduces the balance in supplies, purchases increase the balance. This may be expressed mathematically as

Opening balance + purchases/production - units used/sold = closing balance

Considering the equation above,

5000 + production -23000 = 4000

Production = 4000 + 23000 - 5000

= 22000 units