Marlow Company produces hand tools. A production budget for the next four months is as follows: March 10,900 units, April 13,760, May 16,200, and June 21,900. Marlow Company's ending finished goods inventory policy is 20% of the following month's sales. Marlow plans to sell 16,000 units in May. What is budgeted ending inventory for March?

march ending inventory = 2320

Explanation:

given data

March = 10,900 units

April = 13,760

May = 16,200

June = 21,900

policy = 20%

sell in may = 16,000 units

to find out

budgeted ending inventory for March

solution

we know that ending inventory policy is 20% of next month sales

so march ending inventory is 20% of april sale

so we can say that

april sale + (16000 * 20%) - (april sale * 20%) = 13760

so april sales * 90% = (13760 - (16600 * 20%)

april sales * 90% = 10440

so april sales = 11600

so that march ending inventory is = 20 % of 11600

march ending inventory = 2320