On September 30 of Year 1, Julian Company had finished goods inventory of 1,000
ID: 2469794 • Letter: O
Question
On September 30 of Year 1, Julian Company had finished goods inventory of 1,000 units. Starting in October, Julian intends to have an inventory policy of maintaining ending inventory at the end of every month equal to the next month’s sales. For example, ending inventory at the end of October should be equal to forecasted sales in November.
Forecasted sales for the months October, Year 1 through January, Year 2 are as follows.
October 2,300 units
November 3,000 units
December 1,000 units
January 700 units
What is the amount of budgeted PRODUCTION for October?
5,300 units
3,000 units
3,300 units
2,000 units
4,300 units
5,300 units
3,000 units
3,300 units
2,000 units
4,300 units
Explanation / Answer
Amount of budgeted production for the month of october = Sales + Closing Inventory of finished goods - Opening inventory of finished goods
= 2300 units + 3000 units - 1000 units
= 4300 units
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