Bombs Away Video Games sells the popular Strafe and Capture video game. It sells
ID: 2659525 • 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 24,000 units.
Explanation / Answer
No. of units sold = 744000/5 = 148800 units
No. of units produced each month = 148800/12 = 12400 units
Month
Revenue
Units Sold = Revenue/5
Jan
99000
19800
Feb
92000
18400
Mar
24000
4800
Apr
24000
4800
May
19000
3800
Jun
34000
6800
Jul
44000
8800
Aug
44000
8800
Sep
54000
10800
Oct
84000
16800
Nov
104000
20800
Dec
122000
24400
PRODUCTION AND INVENTORY SCHEDULE
Month
Beginning Inventory
Production
Sales
Ending Inventory
Jan
24000
12400
19800
16600
Feb
16600
12400
18400
10600
Mar
10600
12400
4800
18200
Apr
18200
12400
4800
25800
May
25800
12400
3800
34400
Jun
34400
12400
6800
40000
Jul
40000
12400
8800
43600
Aug
43600
12400
8800
47200
Sep
47200
12400
10800
48800
Oct
48800
12400
16800
44400
Nov
44400
12400
20800
36000
Dec
36000
12400
24400
24000
Month
Revenue
Units Sold = Revenue/5
Jan
99000
19800
Feb
92000
18400
Mar
24000
4800
Apr
24000
4800
May
19000
3800
Jun
34000
6800
Jul
44000
8800
Aug
44000
8800
Sep
54000
10800
Oct
84000
16800
Nov
104000
20800
Dec
122000
24400