Question

Teton Trails manufactures backpacks for adventurers. The backpacks come in two types: Daytripper, and Excursion. Teton anticipates the following sales volumes:

Daytripper:        2,000 backpacks in July, 2,200 backpacks in August

Excursion:        1,200 backpacks in July, 900 backpacks in August

Teton’s policy is to maintain ending inventories at 5% of what is expected for the next month.

What is the budgeted level of production in July for both styles?

Group of answer choices

A. 2,010 Daytripper backpacks and 1,185 Excursion backpacks

B. 2,000 Daytripper backpacks and 1,200 Excursion backpacks

C. 2,010 Daytripper backpacks and 1,185 Excursion backpacks

D. 1,990 Daytripper backpacks and 1,215 Excursion backpacks

Answer 1

A. 2,010 Daytripper backpacks and 1,185 Excursion backpacks
Production Budget
	Daytripper		Excursion
Anticipates Sales Units	2,000		1,200
Add: Ending Inventories (2,200 x 5%, 900 x 5%)	110		45
Total Production required	2,110		1,245
Less: Beginning Inventories (2,000 x 5%, 1,200 x 5%)	100		60
Units to be Produced in July	2,010		1,185