Please help with this question. Acme Office Equipment has experienced a number o
ID: 2583096 • Letter: P
Question
Please help with this question. Acme Office Equipment has experienced a number of out-of-stock situations with respect to its finished-goods inventories. Inventory at the end of June, for example, was only 200 units— an all-time low. Management desires to implement a policy whereby finished-goods inventory is 60% of the following month's sales. Budgeted sales for July, August, and September are expected to be 4,500 units, 3,900 units, and 4,400 units, respectively. Required: Determine the number of units that Outlandish Novelties must produce in July and August.
Explanation / Answer
Answer:-
Where:-
Closing inventory of August month=Budgeted sale of September month*60%
=4400 units*60%=2640 units
Outlandish Novelties Production Budget Particulars July August Units Units Budgeted sales 4500 3900 Add:- Closing Inventory 3900*60%=2340 4400*60%=2640 60% of Following month sale Less:- Opening Inventory 200 2340 No. of units to be produced 6640 4200