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The Cardinal Company had a finished goods inventory of 55,000 units on January 1. Its projected sales for the next four months were: January - 200,000 units; February - 180,000 units; March - 210,000 units; and April - 230,000 units. The Cardinal Company wishes to maintain a desired ending finished goods inventory of 20% of the following month’s sales.

What is the budgeted units of production for January?

a.200,000

b.181,000

c.219,000

d.236,000

Q2:

The Cardinal Company had a finished goods inventory of 55,000 units on January 1. Its projected sales for the next four months were: January - 200,000 units; February - 180,000 units; March - 210,000 units; and April - 230,000 units. The Cardinal Company wishes to maintain a desired ending finished goods inventory of 20% of the following month's sales.

What is the budgeted units of production for February?

a.174,000

b.222,000

c.186,000

d.181,000

Respuesta :

The budgeted units of production for January is $236,000

The budgeted units of production for February is $186,000

Explanation:

  • Goods inventory = 55,000
  • Sales are:
  • January - 200,000 units
  • February - 180,000 units
  • March - 210,000 units
  • April - 230,000
  • The Increase in inventory is as follows,
  • =  (180,000×20%)
  • = 36000
  • Sales for January = 200,000
  • Therefore 200,000 + 36000
  • Budgeted production for January = Increase in inventory + Sales for January
  • Budgeted production for January = $36000 + $200000
  • Budgeted production for January = $236,000
  • QUESTION 2
  • Computing  budgeted units of production for February,
  • Increase in inventory = (210,000×20%) - (180,000×20%)
  • = 42000 ₋ 36000
  • = 6000
  • Sales for February = 180,000
  • Budgeted production for January = Increase in inventory + Sales for  February
  • = $6000 + $180000
  • = $186,000
  • The budgeted units of production for February = $186,000

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