Offenbach & Son has just made its sales forecasts and its marketing department e

Question

Offenbach & Son has just made its sales forecasts and its marketing department estimates that the company will sell 226,200 units during the coming year. In the past, management has maintained inventories of finished goods at approximately one month's sales. The inventory at the start of the budget period is 15,100 units. Sales occur evenly throughout the year Required Estimate the production level required for the coming year to meet these objectives. (Do not round intermediate calculations.) Required production in units

Explanation / Answer

Calculate required production in units :

Required production (units) = Sales in units+Desired ending inventory-Beginning inventory

= 226200+18850-15100

Required production (units) = 229950

Desired ending invnetory = 226200/12 = 18850

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