In: Accounting
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
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 |