Sheridan Company plans to sell 12000 lawn chairs during May, 9700 in June, and 6000 during July. The company keeps 15% of the next month’s sales as ending inventory. How many units should Sheridan produce during June? a. 10255 b. 9145 c. Not enough information to determine d. 10600

Sheridan Company plans to sell 12000 lawn chairs during May, 9700 in June, and 6000 during July. The company keeps 15% of the next month’s sales as ending inventory. How many units should Sheridan produce during June? a. 10255 b. 9145 c. Not enough information to determine d. 10600

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter15: Managing Short-term Assets

Section: Chapter Questions

Problem 19PROB

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Cherboneau Novelties produces drink coasters (among many other products). During the current year (year 0), the company sold 521,000 units (packages of 6 coasters). In the coming year (year 1), the company expects to sell 542,000 units, and, in year 2, it expects to sell 636,000 units. The target ending finished goods inventory for each month is equal to the next month's sales. Howeve because of production issues, the ending inventory in the current year is expected to be only 12,500 units. Each unit requires 0.5 pound of cork. At the end of the current year, management expects to have 19,000 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. a. Total targeted production in units…