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Bengal Co. provides the following unit sales forecast for the next three months: July August September...

Bengal Co. provides the following unit sales forecast for the next three months:

July August September
Sales units 5,000 5,700 5,560


The company wants to end each month with ending finished goods inventory equal to 25% of the next month's sales. Finished goods inventory on June 30 is 1,250 units. The budgeted production units for July are:

Multiple Choice

  • 2,500 units.

  • 3,750 units.

  • 6,425 units.

  • 5,175 units.

  • 6,250 units.

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Answer #1

The budgeted production units for July = (100% - 25 %) of Sales of July + 25% of Sales of August

= 75% * 5000 + 25% - 5700

= 3750+1425

= 5175 units

Hence the correct answer is 5,175 units.

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