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Bengal Co. provides the following unit sales forecast for the next three months:
July August September Sales units 5,000 5,700 5,560 The company wants to end each month with ending finished goods inventory equal to 25% of the next month's sales. Finished goods inventory on June 30 is 1,250 units. The budgeted production units for July are:
Group of answer choices
6,250 units.
3,750 units.
6,425 units.
2,500 units.
5,175 units.

Answer :

The budgeted production units for July are 5665 units.

Sales units for July = 5,000

Sales units for august = 5,700

Sales units for September = 5,560

Desired ending inventory for august = 25% of sales in September

                                                            = 25% × 5,560

                                                           = 1390 Units

Desired ending inventory for July =  25% of sales in august

                                                      = 25% × 5,700                                                                                                                                        

                                                          = 1425 Units

The Desired ending inventory for July is beginning inventory for august.

Beginning inventory for august = 1425 Units

So,

Budgeted production units for August:

=  Sales units for august + Desired ending inventory for august - Beginning inventory for august

= (5,700 + 1390 - 1425) units

= 5665 units

Inventory refers to all the objects, goods, merchandise, and materials held by means of a business for selling in the marketplace to earn a profit. instance: If a newspaper seller makes use of a automobile to supply newspapers to the customers, best the newspaper may be considered stock. The automobile could be handled as an asset.

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