season. Units sold are 1,950 2,950 5,900 4,900 15,700 Total units sold January I

Question

season. Units sold are 1,950 2,950 5,900 4,900 15,700 Total units sold January If seasonal production is used, it is assumed that inventory will directly match sales for each month and there will be no inventory buildup. However, Antonio decides to go with level production to avoid being out of merchandise. He will produce the 15,700 items over four months at a level of 3,925 per month. a. What is the ending inventory at the end of each month? Compare the unit sales to the units produced and keep a running total units units units Activate Windows O Type here to search

Explanation / Answer

Answer a Calculation of Ending Inventory Month Beginning Inventory (units) Production (units) Sales (units) Ending Inventory (units) a b c d b+c-d October 0 3925 1950 1975 November 1975 3925 2950 2950 December 2950 3925 5900 975 January 975 3925 4900 0 Answer b Calculation of Inventory Financing cost Month Ending Inventory (units) Inventory Cost @ $8 per unit Financing Cost @ 1% per month a b c = b * $8 c x 1% October 1975 $15,800.00 $158.00 November 2950 $23,600.00 $236.00 December 975 $7,800.00 $78.00 January 0 $0.00 $0.00 Total Financing Cost $472.00

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