Question

Yandell Company expects to sell 1,650 units of finished product in January and 2,000 units in...

Yandell Company expects to sell 1,650 units of finished product in January and 2,000 units in February. The company has 240 units on hand on January 1 and desires to have an ending inventory equal to 60% of the next month’s sales. March sales are expected to be 2,050 units. Prepare Yandell’s production budget for January and February.
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Answer #1

Working Notes

1) Closing inventory for the month of January = 60% of Next Month Sales i.e February

= Sales of February = 2000× 60%  

1200.

2) Closing inventory for the month of February = 60% of next month sales i.e March

Sales for the month of march = 2050units × 60%

= 1230

3) Closing Stock of January is the opening stock of February Month

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