Question

Production and sales estimates for March for Robin Co. are as follows: Estimated inventory (units), March 1 18,000 Desired inventory (units), March 31 21,600 Expected sales volume (units): Area M 7,000 Area L 8,000 Area O 9,000 Unit sales price $15 The number of units expected to be manufactured in March is

Answer 1

Production = 27600 units

Step-by-step explanation:

The number of units that must be produced during the month should be enough to meet the selling requirement for the month plus the desired level of ending inventory. Any starting of beginning inventory at the start of the month will reduce the number of units to be produced. Thus, the formula to calculate production for the month is,

Sales = Opening inventory + Production - Closing Inventory

Total sales = 7000 + 8000 + 9000 = 24000

24000 = 18000 + Production - 21600

24000 + 21600 - 18000 = Production

Production = 27600 units