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8 September, 00:55

Bengal Co. provides the following 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 August are: Multiple Choice 4,135 units. 4,310 units. 5,665 units. 6,950 units. 7,090 units.

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  1. 8 September, 02:20
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    Answer: Option (C) is correct.

    Explanation:

    Given that,

    Sales units for July = 5,000

    Sales units for august = 5,700

    Sales units for September = 5,560

    Desired ending inventory for august = 25% of sales in September

    = 25% * 5,560

    = 1390 Units

    Desired ending inventory for July = 25% of sales in august

    = 25% * 5,700

    = 1425 Units

    The Desired ending inventory for July is beginning inventory for august.

    Therefore,

    Beginning inventory for august = 1425 Units

    So,

    Budgeted production units for August:

    = Sales units for august + Desired ending inventory for august - Beginning inventory for august

    = (5,700 + 1390 - 1425) units

    = 5665 units
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