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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?

Respuesta :

Answer:

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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