Question

Marlow Company produces hand tools. A production budget for the next four months is as follows: March 10,300 units, April 13,300, May 16,500, and June 21,800. Marlow Company's ending finished goods inventory policy is 10 % of the following month's sales. Meadow plans to sell 16,000 units in May How many units will be sold in April? Multiple Choice 13,000 12,380 13.570 13,620

Answer 1

1.

Ans:

Option 1 13000 units Is Correct Answer

Production in April = 13,300 units.

Ending inventory in April = 10% of May's sales. = 10% of 16,000 = 1,600 units.

We now have to find beginning inventory for April. Production for march = 10,300 units. Assume beginning inventory to be nil for March. Ending inventory of March = 10% of April’s sales. Let april sales be "x"

Thus ending inventory for March will be 10% of x = 0.1x. This will be the beginning inventory of April.

Using the formula:

Opening inventory + production - sales = ending inventory for the month of April

0.1x+13,300 - x = 1,600

x = (13,300-1,600)/0.9 = 11,700/0.9 = 13,000 units.

2.

Ans:

Option 4 $56,600 Is Correct Answer

budgeted manufacturing overhead for August=Fixed cost+Variable cost

=$17000+(6*6600)=$17000+$39600=$56600

3.

Ans:

Option 4  2100 units.   Is Correct Answer

budgeted ending finished goods inventory for May=10%*June sales

which is equal to

=(0.1*21000)

=2100 units.