Question

ere: January - 200,000 units; February - 180,000 units; March - 210,000 units; and April - 230,000 units. The Cardinal Company wishes to maintain a desired ending finished goods inventory of 20% of the following month’s sales.
What is the budgeted units of production for January?

a.200,000

b.181,000

c.219,000

d.236,000

Q2:

The Cardinal Company had a finished goods inventory of 55,000 units on January 1. Its projected sales for the next four months were: January - 200,000 units; February - 180,000 units; March - 210,000 units; and April - 230,000 units. The Cardinal Company wishes to maintain a desired ending finished goods inventory of 20% of the following month's sales.

What is the budgeted units of production for February?

a.174,000

b.222,000

c.186,000

d.181,000

Answer 1

The budgeted units of production for January is $236,000

The budgeted units of production for February is $186,000

Explanation:

• Goods inventory = 55,000

• Sales are:

• January - 200,000 units

• February - 180,000 units

• March - 210,000 units

• April - 230,000
• The Increase in inventory is as follows,
• =  (180,000×20%)
• = 36000
• Sales for January = 200,000
• Therefore 200,000 + 36000
• Budgeted production for January = Increase in inventory + Sales for January

• Budgeted production for January = $36000 + $200000
• Budgeted production for January = $236,000
• QUESTION 2
• Computing  budgeted units of production for February,
• Increase in inventory = (210,000×20%) - (180,000×20%)
• = 42000 ₋ 36000
• = 6000
• Sales for February = 180,000
• Budgeted production for January = Increase in inventory + Sales for  February
• = $6000 + $180000
• = $186,000
• The budgeted units of production for February = $186,000