Walsh Company expects sales of Product W to be 60,000 units in April, 75,000 uni
ID: 2432660 • Letter: W
Question
Walsh Company expects sales of Product W to be 60,000 units in April, 75,000 units in May and 70,000 units in June. The company desires that the inventory on hand at the end of each month be equal to 40% of the next month's expected unit sales. Due to excessive production during March, on March 31 there were 25,000 units of Product W in the ending inventory. Given this information, Walsh Company's production of Product W for the month of April should be:
60,000 units
65,000 units
75,000 units
66,000 units
a.60,000 units
b.65,000 units
c.75,000 units
d.66,000 units
Explanation / Answer
Ending inventory in the month of April = 40% × May month sales
= 40% × $75,000 units
= 30,000 units
Production of Productg W in April = Ending inventory in April + Sales in April - Beginning inventory in April
= 30,000 units + 60,000 units - 25,000 units
= 65,000 units
Therefore, the correct answer is option b. 65,000 units.
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