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16 May, 05:41

Heedy Company is trying to decide how many units of merchandise to produce each month. The company policy is to have 20% of the next month's sales in inventory at the end of each month. Projected sales for August, September, and October are 30,000 units, 20,000 units, and 40,000 units, respectively. The number of units that must be produced in September is a. 28,000 units b. 18,000 units c. 22,000 units d. 24,000 units

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  1. 16 May, 09:09
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    Production = 24,000 units

    Explanation:

    Giving the following information:

    The company policy is to have 20% of the next month's sales in inventory at the end of each month.

    Sales:

    September = 20,000

    October = 40,000

    To determine the number of units to be produced, we need to use the following formula:

    Production = sales + desired ending inventory - beginning inventory

    Production = 20,000 + (40,000*0.2) - (20,000*0.2)

    Production = 24,000 units
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