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13 February, 14:21

Meadow Company produces hand tools. A sales budget for the next four months is as follows: March 10,500 units, April 13,600, May 16,600 and June 21,000. Meadow Company's ending finished goods inventory policy is 10% of the following month's sales. March 1 beginning inventory is projected to be 1,050 units. How many units will be produced in March?

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  1. 13 February, 15:41
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    Units Produced in the month of March: 10,810 Units

    Explanation:

    Production for the month of march can be estimated using the following formula:

    Productions units for the month of March = Projected Sales for the month + 10% of the following months's sales as ending inventory - Opening Inventory

    Units Produced for the month Units

    Projected Sales for the month 10,500

    Add: 10% of the following month's sales as ending inventory 1,360

    (13,600 x 10%)

    Less: Opening inventory (1,050)

    Units produced for the month of March 10,810
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