Question

Sally’s Toy Company manufactures and sells children's roller blades. Each roller blade requires four bearings. For September, Sally’s Toy Company has budgeted roller blade sales of 540 roller blades, while 600 roller blades are scheduled to be produced. Sally’s Toy Company will begin September with 200 bearings in its beginning inventory, and estimates ending inventory for September to be 440 bearings. How many bearings should Sally’s Toy Company purchase in September? Group of answer choices 2640 2400 2600 340

Answer 1

Estimated Sales during September = 600 roller blades

Required bearings per roller blade = 4 bearings

Total bearings required for sales = 540 roller blades * 4 bearings per roller blade = 2,160 bearings.

Purchases to be made = Sales requirements + Required bearings at ending inventory - Opening stock

Purchases to be made = 2,160 + 440 - 200

Purchase to be made = 2,400 bearings

Based on the above calculation, Option B - 2,400 is the correct answer.

Option A is incorrect , 2,640 bearings is arrived if we use production units to calculate the bearings required. However, since there is an ending balance of inventory required, it is reasonable for us to use the estimated sales to calculate the bearing requirements.

Option C is incorrect. 2,600 bearings is an incorrect requirement based on the above calculation.

Option D is incorrect. 340 bearings is incorrect based on the above calculation.