Question

Offenbach & Son has just made its sales forecasts and its marketing department estimates that the company will sell 217,800 units during the coming year. In the past, management has maintained inventories of finished goods at approximately one month’s sales. The inventory at the start of the budget period is 14,600 units. Sales occur evenly throughout the year.

Required:

Estimate the production level required for the coming year to meet these objectives. (Do not round intermediate calculations.)

Answer 1

Answer:-

                             Estimated sales =217800 units

            Add: Desired ending inventory=18150 units (217800/12 months = 18150 per month)

           Total requirement of units-235950 units

            Less; Beginning inventory=14600 units

                   Total to be produced= 221350 units