Question

A company expects to sell 15,000 units in the first quarter, 18,000 units in the second quarter, and 20,000 units in the third quarter. The company desires to maintain an inventory at the end of each quarter equal to 10% of next quarter expected sales. How many units does the company plan to produce in the second quarter?

Answer 1

the number of units produced in the second quarter is 18,200 units

Step-by-step explanation:

The computation of the number of units that have to plan for producing in the second quarter is shown below:

= Sales units - opening inventory units + closing inventory units

= 18,000 units - (18,000 units × 10%) + (20,000 units × 10%)

= 18,000 units - 1,800 units + 2,000 units

= 18,200 units

hence, the number of units produced in the second quarter is 18,200 units