Question

39) Nantucket Industries manufactures and sells two models of watches, Prime and Luxuria. It expects to sell 3,200 units of Prime and 1,300 units of Luxuria in 2019.The following estimates are given for 2019: Prime Luxuria Selling price $200 $500 Direct materials 60 80 Direct labor 90 180 Manufacturing overhead 40 110 Nantucket had an inventory of 230 units of Prime and 85 units of Luxuria at the end of 2018. It has decided that as a measure to counter stock outages it will maintain ending inventory of 370 units of Prime and 200 units of Luxuria. Each Luxuria watch requires one unit of Crimpson and has to be imported at a cost of $11. There were 140 units of Crimpson in stock at the end of 2018.The management does not want to have any stock of Crimpson at the end of 2019.

How many units of Prime watches must be produced in 2019?

Answer 1

Hi,

Lets sum up information given in the question:

Particulars	Prime	Luxuria
Expected units to be sold in 2019	3200	1300
Opening inventory	230	85
Planned inventory of units at year end	370	200

We need to find number of Prime Watches to be produced in 2019.

Forecasted Unit Sales	3200
Add: Planned inventory at the end of the year	370
Total Production Required	3570
Less: Inventory at the beginning of the year	230
Units to be produced	3340

Hence, 3340 units of Prime Watches must be produced in 2019.

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