Masde Corporation produces and sells Product CharlieD. To guard against stockouts, the company requires that 25% of the next month's sales be on hand at the end of each month. Budgeted sales of Product CharlieD over the next four months are: June July August September Budgeted sales in units 40,000 60,000 50,000 80,000 Budgeted production for August would be: A) 57,500 units B) 107,000 units C) 77,000 units D) 80,000 units

Question

Business

Emilia Chang

28 April, 03:55

Masde Corporation produces and sells Product CharlieD. To guard against stockouts, the company requires that 25% of the next month's sales be on hand at the end of each month. Budgeted sales of Product CharlieD over the next four months are: June July August September Budgeted sales in units 40,000 60,000 50,000 80,000 Budgeted production for August would be: A) 57,500 units B) 107,000 units C) 77,000 units D) 80,000 units

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Answers (1)

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Janelle Zamora · Answer 1

The correct answer is A.

Explanation:

Giving the following information:

To guard against stockouts, the company requires that 25% of the next month's sales.

Budgeted sales of Product:

August = 50,000

September = 80,000

To calculate the production budget, we need to use the following formula:

Production for August = expected sales + ending inventory - beginning inventory

Production budget:

Sales = 50,000

Ending incentory = (80,000*0.25) = 20,000

Beginning inventory = (50,000*0.25) = (12,500)

Total = 57,500 units