Bombs Away Video Games sells the popular Strafe and Capture video game. It sells
ID: 2641102 • Letter: B
Question
Bombs Away Video Games sells the popular Strafe and Capture video game. It sells for $5 per unit and costs $2 per unit to produce. A level production policy is followed. Each month's production is equal to annual sales (in units) divided by 12.
Of each month's sales, 20 percent are for cash and 80 percent are on account. All accounts receivable are collected in the month after the sale is made.
Construct a monthly production and inventory schedule in units. Beginning inventory in January is 42,000 units.
Explanation / Answer
Annual Sales = $960,000
Selling Price unit = $5
Therefore, Number of units sold = 960000 / 5 = 192,000
So, number of units produced every month = 192000/12 = 16,000.
Answer to part b.
Answer to part c.
Answer to part d.
Bombs Away Video Games Corporation Monthly production and inventory schedule in units Month Beginning Inventory Prodcution sales Ending Inventory January 42,000 16,000 23,400 34,600 February 34,600 16,000 22,000 28,600 March 28,600 16,000 8,400 36,200 April 36,200 16,000 8,400 43,800 May 43,800 16,000 7,400 52,400 June 52,400 16,000 10,400 58,000 July 58,000 16,000 12,400 61,600 August 61,600 16,000 12,400 65,200 September 65,200 16,000 14,400 66,800 October 66,800 16,000 20,400 62,400 November 62,400 16,000 24,400 54,000 December 54,000 16,000 28,000 42,000