Kaufman Industries has just completed its sales forecasts and its marketing depa

Question

Kaufman Industries has just completed its sales forecasts and its marketing department estimates that the company will sell 49,200 units during the upcoming year. In the past, management has maintained inventories of finished goods at approximately 7 months' sales. However, the estimated inventory at the start of the year of the budget period is only 5,000 units. Sales occur evenly throughout the year. What is the estimated production level (units) for the first month of the upcoming budget year?

Explanation / Answer

49,200/12 = 4,100 sales per month; 4,100 + (3 x 4,100) - 5,000 = 11,400

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