Question

-Antonio Banderos & Scarves makes headwear that is very popular in the fall-winter season. Units sold are anticipated as:

Monthly Unit Sales

October 2,200

November 3,200

December 6,400

January 5,400

17,200 Total units sold

If seasonal production is used, it is assumed that inventory will directly match sales for each month and there will be no inventory buildup.

However, Antonio decides to go with level production to avoid being out of merchandise. He will produce the 17,200 items over four months at a level of 4,300 per month.

a. What is the ending inventory at the end of each month? Compare the unit sales to the units produced and keep a running total.
-October___ units

-November___units

-December___units

-January___units

b. If the inventory costs $6 per unit and will be financed at the bank at a cost of 12 percent, what is the monthly financing cost and the total for the four months? (Use 1 percent as the monthly rate.)

-October

-November

-December

-January

-Total Financing cost

Answer 1

Month	Units in beginning month inventory	Unit produced	Units sold	Units in month end inventory = units in beginning inventory + units produced - unnits sold
October	0	4300	2200	2100
November	2100	4300	3200	3200
December	3200	4300	6400	1100
January	1100	4300	5400	0
2-
Month	Units in month end inventory = units in beginning inventory + units produced - units sold	Monetary value of inventory = units in inventory* unit cost	Financing cost = monetary value of inventory*financing cost
October	2100	12600	126
November	3200	19200	192
December	1100	6600	66
January total financing cost	0	0	0 384

answered by: anonymous