Question

Heedy Company is trying to decide how many units of merchandise to produce each month. The company policy is to have 20% of the next month's sales in inventory at the end of each month. Projected sales for August, September, and October are 30,000 units, 20,000 units, and 40,000 units, respectively. The number of units that must be produced in September is a.28,000 units b.18,000 units c.22,000 units d.24,000 units

Answer 1

Production= 24,000 units

Step-by-step explanation:

Giving the following information:

The company policy is to have 20% of the next month's sales in inventory at the end of each month.

Sales:

September= 20,000

October= 40,000

To determine the number of units to be produced, we need to use the following formula:

Production= sales + desired ending inventory - beginning inventory

Production= 20,000 + (40,000*0.2) - (20,000*0.2)

Production= 24,000 units