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In: Accounting

Manop, Inc. is facing a problem with their 4th quarter absorption costing net operating income on...

Manop, Inc. is facing a problem with their 4th quarter absorption costing net operating income on December 25. Their net operating income target is $250,000 and the data so far is as follows:

Sales Revenue

$600,000

($200/unit)

Variable COGS

$240,000

($80/unit)

Fixed manufacturing overhead

$70,000

Fixed S&A

$50,000

Variable S&A: Commission on Sales

3%

Finished Goods Inventory as of December 25

450 units

Up until this quarter, Manop, Inc. has had a policy of having zero inventories at the end of each quarter. No further sales are possible during the year. Mr. D, the CEO, is planning to produce more units for inventory in the last week of December to meet the net operating income target.

Q) How many additional inventory units above the December 25 Finished Goods balance need to be produced in the fourth quarter to meet the net operating income target if the sales commission is left unchanged? (Express your answer to the nearest whole number.)

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Expert Solution

ekkarill92 answered 1 year ago
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