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22 October, 17:29

Terrence Corporation plans to sell 35,000 units of its single product in March. The company has 2,200 units in its March 1 finished-goods inventory and anticipates having 1,800 completed units in inventory on March 31. On the basis of this information, how many units does Terrence plan to produce during March

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  1. 22 October, 21:00
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    Budgeted production in units = 34,600 units.

    Explanation:

    Budgeted production in units = Budgeted sales + Ending finished goods inventory - Beginning finished goods inventory

    Given,

    Budgeted sales = 35,000 units

    Ending finished goods inventory = 1,800 units

    Beginning finished goods inventory = 2,200 units

    Putting the values into the formula, we can get

    Budgeted production in units = Budgeted sales + Ending finished goods inventory - Beginning finished goods inventory

    or, Budgeted production = 35,000 + 1,800 - 2,200

    or, Budgeted production = 36,800 - 2,200

    or, Budgeted production = 34,600 units.
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