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 April May June 3,200 7,200 11,400 9,400 31,200 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. 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 31,200 units over four months at a level of 7,800 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. for March, April, May, June b. If the inventory costs $17 per unit and will be financed at the bank at a cost of 6 percent, what is the monthly financing cost and the total for the four months? (Use .5 percent as the monthly rate.) For March, April, May and June and a total.
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 April May June 3,200 7,200 11,400 9,400 31,200 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. 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 31,200 units over four months at a level of 7,800 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. for March, April, May, June b. If the inventory costs $17 per unit and will be financed at the bank at a cost of 6 percent, what is the monthly financing cost and the total for the four months? (Use .5 percent as the monthly rate.) For March, April, May and June and a total.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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
April
May
June
3,200
7,200
11,400
9,400
31,200
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.
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 31,200 units
over four months at a level of 7,800 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.
for March, April, May, June
b. If the inventory costs $17 per unit and will be financed at the bank at a cost of 6 percent,
what is the monthly financing cost and the total for the four months? (Use .5 percent as the
monthly rate.) For March, April, May and June and a total.
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