Vermicelli Company plans to sell 400,000 units of finished product in July and anticipates a growth...
Vermicelli Company plans to sell 400,000 units of finished product in July and anticipates a growth rate in sales of 5% per month. The desired monthly ending inventory in units of finished product is 80% of the next month's estimated sales. There are 350,000 finished units in inventory on June 30.
Vermicelli Company's production requirement in units of finished
product for the three-month period ending September 30 is: (CMA
adapted)
Homework Answers
| Particulars | June | July | August | September | October |
| Sales | NA | 4,00,000 | 4,20,000 | 4,41,000 | 4,63,050 |
| Closing Inventory required (5% of next month's sales) | 3,50,000 | 3,36,000 | 3,52,800 | 3,70,440 | NA |
| Production requirement (Sales + Closing Inventory Required - Closing Inventory of last month | NA | 3,86,000 | 4,36,800 | 4,58,640 | NA |
| Hence, total production requirement for 3 month period ending September 30 = 386,000+436,800+458,640 = 12,81,440 units | |||||
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Vermicelli Company plans to sell 400,000 units of finished
product in July and anticipates a growth...
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