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A company budgeted unit sales of 204,000 units for January, 2017 and 240,000 units for February 2017. The company has a...

A company budgeted unit sales of 204,000 units for January, 2017 and 240,000 units for February 2017. The company has a policy of having an inventory of units on hand at the end of each month equal to 30% of next month's budgeted unit sales.

            If there were 61,200 units of inventory on hand on December 31, 2016, how many units should be produced in January, 2017 in order for the company to meet its goals?

a.   214,800 units

b.   204,000 units

c.   193,200 units

d.   276,000 units

business   accounting   
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Answer #1

Answer: Option ( A ) 214,800 units

January 204000 72000 Expected units sales Add: Desire Ending Inventory Total required units Less: Beginning Inventory Require

Desire ending inventory = 240,000 * 30% = 72000

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