Hardin Inc., has budgeted sales in units for the next five months as follows: Ju

Question

Hardin Inc., has budgeted sales in units for the next five months as follows:

June 7,400 units
July 6,600 units
August 6,800 units
September 7,600 units
October 7,500 units

Past experience has shown that the ending inventory for each month should be equal to 12% of the next month's sales in units. The inventory on May 31 contained 888 units. The company needs to prepare a production budget for the next five months.

The total number of units produced in July should be:
7,416 units
6,576 units
6,600 units
6,624 units

PLEASE SHOW Work

Explanation / Answer

June July
Unit Sales 7,400 6,600
(less) Starting Inventory 888 792
Ending Inventory(12% of next month sales) 792 816
Units produced 7,304 6,624

In July 6,624 Units have to be produced.

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