Use the following information for question 14-16 Young Enterprises has budgeted

Question

Use the following information for question 14-16 Young Enterprises has budgeted sales in units for the next five months as follows: Past experience has shown that the ending inventory for each month should be equal to 10% of the next month's sales in units. The inventory on May 31 fell short of this goal since it contained only 400 units. The company needs to prepare a Production Budget for the next five months. The beginning inventory in units for September should be: The total number of units to be produced in July is: The desired ending inventory for August is: A static budget:

Explanation / Answer

14.) D

Sales in September is equal to 6800. So inventory at the end of previous month or the start of current month should be equal to 10% of this level which is equal to 680

15.) C

Starting Inventory in July = 720

Ending Inventory in July = 540

Sales in July = 7200

Net Production = Sales + Ending Inventory - Starting Inventory = 7020

16.) B (Reasoning given in answer for question 14)

17.) C

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