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Rambo Producers has the following sales forecast for Line 1 Product for the first two months of 2022 January 30 000 units February 40 000 units Rambo Producers maintains an inventory, at the end of the month, equal to 20% of the budgeted sales of the following month. Required: Determine the required number of units that should be produced during January 2022.

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User Tevin J
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1 Answer

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Given the following sales forecast for Line 1 Product for the first two months of 2022:January 30,000 Units February 40,000 Units Rambo Producers maintains an inventory, at the end of the month, equal to 20% of the budgeted sales of the following month. Let's find out the required number of units that should be produced during January 2022.In order to determine the required number of units that should be produced during January 2022, we need to calculate the sales for February 2022 because the inventory at the end of January will be 20% of the sales of February 2022.So, Sales for February 2022 = 40,000 units20% of sales of February 2022 = 20/100 × 40,000= 8,000 unitsTherefore, required sales in February 2022= 40,000 + 8,000= 48,000 Units So, the required production in January 2022 will be:Required production in January 2022= Sales in January 2022+ Inventory build-up for February 2022= 30,000 + (20/100 × 48,000)= 30,000 + 9,600= 39,600 units.So, the required number of units that should be produced during January 2022 is 39,600 units.

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User Andimeier
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