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 3,100 April 7,100 May 11,200 June 9,200 30,600 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 30,600 units over four months at a level of 7,650 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. b. If the inventory costs $12 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
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 | 3,100 | |
| April | 7,100 | |
| May | 11,200 | |
| June | 9,200 | |
| 30,600 | 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 30,600 units over four months at a level of 7,650 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.
b. If the inventory costs $12 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.)
Ending inventory refers to the value of inventory lying with the entity at the end of the accounting period.
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