Ask Question
13 October, 08:42

Marlow Company produces hand tools. A production budget for the next four months is as follows: March 10,300 units, April 13,300, May 16,500, and June 21,800. Marlow Company's ending finished goods inventory policy is 10% of the following month's sales. Marlow plans to sell 16,000 units in May. How many units will be sold in April?

+2
Answers (1)
  1. 13 October, 10:43
    0
    13,000 units

    Explanation:

    Given that,

    Total production in April = 13,300 units

    Total sales in May = 16,000 units

    Ending finished goods inventory = 10% of the following month's sales

    Therefore, the number of units sold in April is determined by deducting ending finished goods inventory of April from the total production of units in April and beginning finished goods inventory.

    Let the sales in April be x,

    The beginning finished goods inventory of April is same as the ending inventory of March.

    Ending finished goods inventory in March:

    = 10% of sales in April

    = 0.1 x

    Ending finished goods inventory in April:

    = 10% of sales in May

    = 0.1 * 16,000 units

    = 1,600 units

    Therefore, the number of units in April is calculated as follows:

    Ending inventory = Total production in April + Beginning inventory of April - Sales

    1,600 units = 13,300 units + 0.1x - x

    0.9x = 13,300 - 1,600

    0.9x = 11,700

    x = 13,000 units

    Hence, the number of units sold in April is 13,000.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Marlow Company produces hand tools. A production budget for the next four months is as follows: March 10,300 units, April 13,300, May ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers