**Question:** Assume a company's estimated sales for January, February, and March are 30,000 units, 31,000 units, and 29,000 units, respectively. The company always maintains ending finished goods inventory equal to 30% of next month’s unit sales. What is the required production in units for January?**Multiple Choice Options:**- ○ 30,300 units- ○ 30,700 units- ○ 29,700 units- ○ 39,300 units**Explanation:** To determine the required production for January, consider the following:1. **Calculate the Desired Ending Inventory for January:** - Ending inventory for January = 30% of February's sales - 0.30 x 31,000 = 9,300 units2. **Determine the Starting Inventory for January:** Let's assume there is no beginning inventory for simplicity.3. **Calculate Required Production for January:** - Required production = January sales + Desired ending inventory - Beginning inventory - Required production = 30,000 + 9,300 - 0 - Required production = 39,300 unitsThe answer is 39,300 units.

Solution: Budgeted production in units for January = Budgeted sales units + Desired ending inventory -Beginning inventoryBudgeted production in units for January = 30000 + (31000*30%) - (30000*30%) = 30000 + 9300 - 9000 = 30300 units Hence first option is correct.

Business

Accounting

Assume a company's estimated sales for January, February, and March are 30,000 units, 31,000 units, and 29,000 unis, respectively. The company always maintains ending finished goods inventory equal to 30% of next month's unit sales. What is the required production in units for January?

Assume a company's estimated sales for January, February, and March are 30,000 units, 31,000 units, and 29,000 unis, respectively. The company always maintains ending finished goods inventory equal to 30% of next month's unit sales. What is the required production in units for January?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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