Please show all work 2. WARD Company plans to sell 400,000 units of finished pro

Question

Please show all work

2. WARD Company plans to sell 400,000 units of finished product in July 2007. Management (1) anticipates a growth rate in sales of 5% per month thereafter and (2) desires a monthly ending finished-goods inventory (in units) of 80% of the following month's estimated sales. There are 300,000 completed units in the June 30, 2007 inventory.

Each unit of finished product requires four pounds of direct material at a cost of $1.50 per pound. There are 1,600,000 pounds of direct material in inventory on June 30, 2007.

Required: How many units must WARD Company produce for the quarter ended September 30, 2007?

Explanation / Answer

Calculate  How many units must WARD Company produce for the quarter ended September 30, 2007?

1331440 units must WARD Company produce for the quarter ended September 30, 2007.

July August September Quarter Sales 400000 420000 441000 1261000 Add Desired ending inventory 336000 352800 370440 370440 Total needss 736000 772800 811440 1631440 Less: Beginning inventory (300000) (336000) (352800) (300000) Production units 436000 436800 458640 1331440

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