Detmer Enterprises has budgeted sales for the next five months as follows: Janua

Question

Detmer Enterprises has budgeted sales for the next five months as follows:

January.......3,800 units
February......6,800 units
March.........5,400 units
April...........7,200 units
May............4,600 units

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 December 31 contained 400 units, which was in excess of the desired level of inventory. The company needs to prepare a Production Budget for the first quarter of the year.

The desired ending inventory for April is:



a. 460 units b. 540 units c. 720 units d. 680 units

Explanation / Answer

720

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