Walsh Company expects sales of Product W to be 60,000 units in April, 75,000 uni

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 toexcessive roduction during March, there were 25,000 units of Product W in the ending inventory on March 31. Given this information, what should be Walsh Company's production of Product W for the month of April? O a. 60,000 units. b.65,000 units. c.75,000 units d. 66,000 units.

Explanation / Answer

Ending inventory in April = 40% of May month sales

= 40% × 75,000 units

= 30,000 units

Production of Product W in April = Eniding inventory + Sales - Beginning inventory

= 30,000 untis + 60,000 units - 25,000 units

= 65,000 units

Hence, the correct answer is 65,000 units.

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