Terrence Corporation plans to sell 40,000 units of its single product in March. The company has 2,700 units in its March 1 finished-goods inventory and anticipates having 2,300 completed units in inventory on March 31. On the basis of this information, how many units does Terrence plan to produce during March

Terrence plan to produce 39,600 units during March

Explanation:

The Inventory at the start of each period is beginning inventory.

March 1 is the start of the month, and the beginning inventory is 2,700 units.

The Inventory at the end of each period is ending inventory.

March 31 is the end of the month, and the ending inventory is 2,300 units.

Estimated sale for the period is 40,000.

As we know sales are made from the inventory available for sale and any leftover at the end of the period is ending Inventory. As we have all these value we need to calculate the units to be produced. From following Formula

Ending Inventory = Beginning Inventory + Production in the period - Sale in the period

2,300 = 2,700 + Production in the period - 40,000

2,300 = Production in the period - 37,300

2,300 + 37,300 = Production in the period

Production in the period = 39,600 units

Terrence plan to produce = 39,600 units

Explanation:

The production budgeted for a particular period is the expected units to be produced after adjusting the sales budget figures for opening and closing inventories.

Production budget = opening inventory + sales budget - closing inventory

=40,000 + 2300 - 2700 = 39,600

Terrence plan to produce = 39,600 units