Gorberchev Food Processing expects to have 20,000 units of finished goods inventory on hand on March...

Gorberchev Food Processing expects to have 20,000 units of finished goods inventory on hand on March 31 and reports the following expected sales (in units) for the months of April through July: April 120,000 May 130,000 June 140,000 July 120,000 At the end of each month the company desires its ending finished goods inventory to be 20% of the next month's projected sales (in units). The budgeted production (in units) for Gorberchev Food Processing for May should be: Multiple Choice 132,000. 128,000. 130,000. 104,000. 138,000.

Expert Solution

May sales = 130,000 units

At the end of each month the company desires its ending finished goods inventory to be 20% of the next month's projected sales (in units)

Ending inventory for May = June sales x 20%

= 140,000 x 20%

= 28,000 units

Ending inventory for April = May sales x 20%

= 130,000 x 20%

= 26,000 units

Ending inventory for April will be the beginning inventory for May.

The budgeted production (in units) for Gorberchev Food Processing for May should be = May sales + Ending inventory for May - Beginning inventory for May

= 130,000 + 28,000 - 26,000

= 132,000 units

First option is correct.

ekkarill92 answered 2 years ago

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