Question

In: Accounting

Dido Co.’s finished goods inventory policy is to hold enough inventory at the end of the...

Dido Co.’s finished goods inventory policy is to hold enough inventory at the end of the month to meet 22% of next month’s sales requirements. The cost and selling price of each unit of inventory is $19 and $29, respectively.

Dido’s budgeted sales (in units) for the months June through September 20x1 is as follows:

June

7510

July

5064

August

9826

September

2192


What is Dido’s budgeted production (in dollars) for the month of August 20x1?

Select one:

a. $8147

b. $195857

c. $154784

d. $236249

Solutions

Expert Solution

Correct option is: c. $154,784
Workings:
August
Budgeted Sales in units = 9826
Add: Desired ending Inventory (2192 X 22%) =                        482
Total Production required =                  10,308
Less: Beginning Inventory (9826 X 22%) =                    2,162
Units to be produced =                    8,147
Cost per unit = $                      19
Budgeted production (8147 X $19) = $          1,54,784

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