Question

Masde Corporation produces and sells Product CharlieD. To guard against stockouts, the company requires that 25% of the next month's sales be on hand at the end of each month. Budgeted sales of Product CharlieD over the next four months are: June July August September Budgeted sales in units 40,000 60,000 50,000 80,000 Budgeted production for August would be: A) 57,500 units B) 107,000 units C) 77,000 units D) 80,000 units

Answer 1

Answer:

The correct answer is A.

Explanation:

Giving the following information:

To guard against stockouts, the company requires that 25% of the next month's sales.

Budgeted sales of Product:

August= 50,000

September= 80,000

To calculate the production budget, we need to use the following formula:

Production for August= expected sales + ending inventory - beginning inventory

Production budget:

Sales= 50,000

Ending incentory= (80,000*0.25)= 20,000

Beginning inventory= (50,000*0.25)= (12,500)

Total= 57,500 units