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20 May, 16:34

Bengal Co. provides the following unit sales forecast for the next three months: July August September Sales units 5,000 5,700 5,560 The company wants to end each month with ending finished goods inventory equal to 25% of the next month's sales. Finished goods inventory on June 30 is 1,250 units. The budgeted production units for July are:

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  1. 20 May, 18:38
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    The budgeted production of the units for the month of July are 5,175 units

    Explanation:

    The budgeted production of the units for the month of July is computed as:

    Budgeted production units for July = July units + 25% of August units - Ending inventory of June

    where

    July units is 5,000 units

    August units is 5,700

    So, 25% will be:

    = 5,700 * 25%

    = 1,425

    Ending inventory of June is 1,250 units

    So, putting the units above:

    Budgeted production units for July = 5,000 units + 1,425 units - 1,250 units

    Budgeted production units for July = 6,425 units - 1,250 units

    Budgeted production units for July = 5,175
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