Question

Trumbull Co. plans to produce 100,000 toy cars during September. Planned production for October is 125,000 cars. Sales are forecasted at 90,000 toy cars for September and 120,000 toy cars for October. Each toy car requires four wheels. Trumbull’s policy is to maintain 10 percent of the next month’s production in inventory at the end of a month. How many wheels should Trumbull purchase during September?

a.102,500

b.410,000

c.195,000

d.112,500

Answer 1

• Working

Working	September
A	Budgeted Production	100,000
B	Wheel required per car	4
C = A x B	Total Wheels required for production	400,000
D = 125000 cars x 4 wheels x 10%	Desired ending Inventory of wheels	50,000
E = C+D	Total needs	450,000
F = C x 10%	Beginning Inventory	40,000
G = E - F	Wheels needed to be purchased	410,000

• Correct Answer = Option ‘B’ 410,000 wheels