Question

Furniture, Inc., estimates the following number of mattress sales for the first four months of 2020:...

Furniture, Inc., estimates the following number of mattress sales for the first four months of 2020:

Month Sales

January 10,000

February 14,000

March 13,000

April 16,000

Finished goods inventory at the end of December is 3,000 units. Target ending finished goods inventory is 30% of the next month's sales. How many mattresses need to be produced in January 2020?

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Answer #1

January sales = 10,000 units

Ending finished goods inventory of January = 30% of February sales

= 14,000 x 30%

= 4,200 units

Finished goods inventory at the end of December is 3,000 units.

Ending finished goods inventory of December will be the beginning Finished goods inventory of January.

Production in January = January sales + Ending finished goods inventory of January - Beginning Finished goods inventory of January

= 10,000 + 4,200 - 3,000

= 11,200 units

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