Question

Schrank Company is trying to decide how many units of merchandise to order each month. Company policy is to have 25% of the next month's sales in inventory at the end of each month. Projected sales for August, September, and October are 44,000 units, 34,000 units, and 54,000 units, respectively. How many units must be purchased in September

Answer 1

56,000 units

Step-by-step explanation:

The computation of Units to be Purchased in September is shown below:-

= (Sales) + (Ending Inventory for September) - (Opening Inventory for September)

= 34,000 + (25% × 54,000) - (25% × 34,000)

= 34,000 + 13,500 + 8,500

= 56,000 units

Therefore for computing the Units to be Purchased in September we simply applied the above formula.