Question

Sheffield Corp. estimates its sales at 240000 units in the first quarter and that sales will increase by 24000 units each quarter over the year. They have, and desire, a 25% ending inventory of current quarter's sales in units. Each unit sells for $35. 40% of the sales are for cash. 70% of the credit customers pay within the quarter. The remainder is received in the quarter following sale. Production in units for the third quarter should be budgeted at

Answer 1

Sheffield Corp.

The Production in units for the third quarter should be budgeted at:

= 294,000 units.

Step-by-step explanation:

a) Data and Calculations:

Quarter 1 Quarter 2 Quarter 3 Quarter 4

Sales units 240,000 264,000 288,000 312,000

Ending inventory 60,000 66,000 72,000 78,000

Units available for sale 300,000 330,000 360,000 390,000

Less Beginning inventory 0 60,000 66,000 72,000

Production units 300,000 270,000 294,000 318,000