Question

Roberts Enterprises has budgeted sales in units for the next five months as follows:
June 7080 units
July 3890 units
August 4690 units
September 8050 units
October 5490 units
Past experience has shown that the ending inventory for each month must be equal to 20% of the next month's sales in units. The inventory on May 31 contained 938 units. The company needs to prepare a production budget for the second quarter of the year. The total number of units to be produced in July is:__________
a) 9,148 units
b) 8,050 units
c) 7,538 units
d) 8,348 units

Answer 1

Answer: 4,050 units

Explanation:

Units to be produced in July = Units sold + ending inventory - beginning inventory

Ending inventory = 20% of August sales = 20% * 4,690 = 938 units

Beginning inventory = 20% of July sales = 20% * 3,890 = 778 units

Units to be produced = 3,890 + 938 - 778

= 4,050 units

Options are most probably for a similar question with different details.