Ruiz Co. provides the following unit sales forecast for the next three months: The company wants to end each month with ending finished goods inventory equal to 10% of the next month's sales. Finished goods inventory on December 31 is 300 units. The budgeted production units for February are:
A) 5,000 units.
B) 4,200 units.
C) 4,700 units.
D) 4,120 units.
E) 4,280 units.

Question

Ruiz Co. provides the following unit sales forecast for the next three months:  The company wants to end each month with ending finished goods inventory equal to 10% of the next month's sales. Finished goods inventory on December 31 is 300 units. The budgeted production units for February are:
A) 5,000 units. 
B) 4,200 units. 
C) 4,700 units. 
D) 4,120 units. 
E) 4,280 units.

Quizplus · Accepted Answer

February units + 10% of March units − January 31 inventory = February production
4,200 units + (5,000 units × .10) − (4,200 units × .10) = 4,280 units

Ruiz Co Provides the Following Unit Sales Forecast for the Next