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Cherboneau Novelties produces drink coasters (among many other products). During the current year (year 0), the company sold 539,000 units (packages of 6 coasters). In the coming year (year 1), the company expects to sell 578,000 units, and, in year 2, it expects to sell 852,000 units. The target ending finished goods inventory for each month is equal to the next month's sales. However, because of production issues, the ending inventory in the current year is expected to be only 21,500 units. Each unit requires 0.5 pound of cork. At the end of the current year, management expects to have 23,500 pounds of cork in inventory. Management has set a target to have cork on hand equal to one half of next month's sales requirements. Sales and production take place evenly throughout the year.

Cherboneau Novelties produces drink coasters (among many other products). During the current year (year 0), the company sold 539,000 units (packages of 6 coasters). In the coming year (year 1), the company expects to sell 578,000 units, and, in year 2, it expects to sell 852,000 units. The target ending finished goods inventory for each month is equal to the next month's sales. However, because of production issues, the ending inventory in the current year is expected to be only 21,500 units. Each unit requires 0.5 pound of cork. At the end of the current year, management expects to have 23,500 pounds of cork in inventory. Management has set a target to have cork on hand equal to one half of next month's sales requirements. Sales and production take place evenly throughout the year.

FINANCIAL ACCOUNTING
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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Cherboneau Novelties produces drink coasters (among many other products). During the current year (year 0), the company sold 539,000 units (packages of 6 coasters). In the coming year (year 1), the company expects to sell 578,000 units, and, in year 2, it expects to sell 852,000 units. The target ending finished goods inventory for each month is equal to the next month's sales. However, because of production issues, the ending inventory in the current year is expected to be only 21,500 units. Each unit requires 0.5 pound of cork. At the end of the current year, management expects to have 23,500 pounds of cork in inventory. Management has set a target to have cork on hand equal to one half of next month's sales requirements. Sales and production take place evenly throughout the year. Required: a. Compute the total targeted production of the finished coaster for the coming year. b. Compute the required amount of cork to be purchased for the coming year. Answer is complete but not entirely correct. a. Total targeted production in units b. Materials to be purchased in pounds 1,156,000 units 289,000 pounds
Transcribed Image Text:Cherboneau Novelties produces drink coasters (among many other products). During the current year (year 0), the company sold 539,000 units (packages of 6 coasters). In the coming year (year 1), the company expects to sell 578,000 units, and, in year 2, it expects to sell 852,000 units. The target ending finished goods inventory for each month is equal to the next month's sales. However, because of production issues, the ending inventory in the current year is expected to be only 21,500 units. Each unit requires 0.5 pound of cork. At the end of the current year, management expects to have 23,500 pounds of cork in inventory. Management has set a target to have cork on hand equal to one half of next month's sales requirements. Sales and production take place evenly throughout the year. Required: a. Compute the total targeted production of the finished coaster for the coming year. b. Compute the required amount of cork to be purchased for the coming year. Answer is complete but not entirely correct. a. Total targeted production in units b. Materials to be purchased in pounds 1,156,000 units 289,000 pounds
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