**Estimating Required Production Units for January***Question:*Assume a company's estimated sales for January, February, and March are 41,000 units, 42,000 units, and 40,000 units, respectively. The company always maintains ending finished goods inventory equal to 15% of next month's unit sales. What is the required production in units for January?*Multiple Choice:*- 41,150 units- 47,300 units- 40,850 units- 41,850 units*Explanation:*To determine the required production for January, first calculate the ending inventory for that month, which should be 15% of February's sales.- February's sales = 42,000 units- Ending inventory for January = 15% of 42,000 units = 6,300 unitsNext, calculate the beginning inventory for January, which is 15% of January's sales:- January's sales = 41,000 units- Beginning inventory for January = 15% of 41,000 units = 6,150 unitsFinally, use the formula for calculating required production:\[ \text{Required Production} = \text{Sales} + \text{Ending Inventory} - \text{Beginning Inventory} \]\[ \text{Required Production} = 41,000 + 6,300 - 6,150 = 41,150 \text{ units} \]Therefore, the correct answer is **41,150 units**.

Desired ending inventory for January = Estimated sales for February x 15% = 42000 x 15% = 6300 unitsBeginning inventory for January = Estimated sales for January x 15% = 41000 x 15% = 6150 units Required production in January = Estimated sales for January + Desired ending inventory for January - Beginning inventory for January = 12000+6300-6150 = 41,150 units

Business

Accounting

Assume a company's estimated sales for January, February, and March are 41,000 units, 42,000 units, and 40,000 units, respectively. The company always maintains ending finished goods inventory equal to 15% of next month's unit sales. What is the required production in units for January? Multiple Choice 41,150 units 47,300 units 40,850 units 41,850 units

Assume a company's estimated sales for January, February, and March are 41,000 units, 42,000 units, and 40,000 units, respectively. The company always maintains ending finished goods inventory equal to 15% of next month's unit sales. What is the required production in units for January? Multiple Choice 41,150 units 47,300 units 40,850 units 41,850 units

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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