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17 September, 08:41

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?

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  1. 17 September, 09:20
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    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
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