Question

Bambino Sporting Goods makes baseball gloves that are very popular in the spring and early summer season. Units sold are anticipated as follows:

Monthly Unit Sales
March	3,350
April	7,350
May	11,700
June	9,700
	32,100	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.

  The production manager thinks the preceding assumption is too optimistic and decides to go with level production to avoid being out of merchandise. He will produce the 32,100 units over four months at a level of 8,025 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.

	ENDING INVENTORY
MARCH	______ UNITS
APRIL	_______ UNITS
MAY	_______ UNITS
JUNE	_______ UNITS

b. If the inventory costs $12 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 1.0 percent as the monthly rate.)

	INVENTORY FINANCING COSTS
APRIL
MAY
JUNE
JULY
TOTAL COSTS

  

Answer 1

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