Hardin, Inc, has budgeted sales in units for the next five months as follows: Ju
ID: 2499241 • Letter: H
Question
Hardin, Inc, has budgeted sales in units for the next five months as follows:
June
6,800 units
July
5,600 units
August
6,000 units
September
7,000 units
October
6,900 units
Past experience has shown that the ending inventory for each month should be equal to 15% of the next month's sales in units. The inventory on May 31 contained 1,020 units. The company needs to prepare a production budget for the next five months
The beginning inventory for September should be:
900 units
1035 units
1020 units
1050 units
The total number of units produced in July should be:
6,500 units
5,600 units
5,660 units
5,540 units
June
6,800 units
July
5,600 units
August
6,000 units
September
7,000 units
October
6,900 units
Explanation / Answer
Beginning inventory for September is 1,050 (15% x 7,000)
Beginning inventory for July is 840 (15% x 5,600)
Number of units produced to meet July sales is 4,760 (5,600 - 840)
Number of units produced to meet beginning inventory of August is 900 (15% x 6,000)
Total units produced in July is 5,660 (4,760+900)
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