Question

In: Accounting

The firm's inventory policy is to have ending inventory equal to 10% of next month's sales.

The firm's inventory policy is to have ending inventory equal to 10% of next month's sales.
Fill in the missing numbers.


FebruaryMarchApril
Ending inventory

5,000
Beginning inventory


Budgeted sales12,00013,00019,000
Budgeted production


(If you get stuck on the beginning inventory for February: it is equal to the ending inventory for January, which you can compute with the available data on February sales)

Solutions

Expert Solution

Beginning inventory+Budgeted production-Ending inventory=Budgeted sales

February March April
Ending inventory (10%*13000)=1300 (10%*19000)=1900 5000
Beginning inventory (10%*12000)=1200 1300 1900
Budgeted sales 12000 13000 19000
Budgeted production (12000+1300-1200)=12100 (13000+1900-1300)=13600 (19000+5000-1900)=22100

ekkarill92 answered 2 years ago
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