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6 March, 16:15

Motorcycle Manufacturers, Inc., projected sales of 57,400 machines for the year. The estimated January 1 inventory is 6,890 units, and the desired December 31 inventory is 7,240 units. The budgeted production for the year is?

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  1. 6 March, 18:47
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    57,750 units

    Explanation:

    The budgeted production for the year is a factor of the opening inventory balance, the projected sales for the year and the desired closing inventory value. The relation between all items is as shown below;

    Opening inventory balance + budgeted production - sales = closing inventory balance

    Given projected sales of 57,400 machines for the year. The estimated January 1 inventory is 6,890 units, and the desired December 31 inventory is 7,240 units.

    let the budgeted production be k

    6,890 + k - 57,400 = 7,240

    k = 7,240 + 57,400 - 6,890

    k = 57,750 units

    The budgeted production for the year is 57,750 units
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