Question

Young Enterprises has budgeted sales in units for the next five months as follows: June: 4,600...

Young Enterprises has budgeted sales in units for the next five months as follows:

June: 4,600 Units

July: 7,200 Units

August: 5,400 Units

September: 6,800 Units

October: 3,800 Units

Past experience has shown that the ending inventory for each month should be equal to 10% of the next month's sales in units. The inventory on May 31 fell short of this goal since it contained only 400 units. The company needs to prepare a Production Budget for the next five months. The beginning inventory in units for September should be:

A) 680 Units

B) 540 Units

C)460 Units

D)6,800 Units

Business   Accounting   
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Answer #1

Ans: A) 680 Units

Solu: Inventory Ending in August = beginning inventory in units for September

         Inventory Ending in August = Sales inventory in September x 10 % ending inventory

= 6800 units x 10%

   = 680 Units                                    

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