Question

Candace company produces and sells pillows. it expects to sell 10,000 pillows in the year 2012 and had 1,000 pillows in finished goods inventory at the end of 2011. candace would like to complete operations in the year 2012 with at least 1,250 completed pillows in inventory. there is no ending work-in-process inventory. the pillows sell for $5 each. how many pillows would be produced in the year 2012

Answer 1

Calculation of the number of pillows to be produced:

The expected Sales for the year 2012 is 10,000 pillows.

There were 1,000 pillows in finished goods inventory at the end of 2011, it means the beginning Finished Goods inventory for the year 2012 is 1,000 pillow.

The desired ending finished goods inventory for the year is given 1,250 pillows.

Now the number of pillows to be produced can be calculated using the following formula:

Number of pillows to be produced = Expected Sales + Desired ending finished goods inventory - Beginning Finished Goods inventory

= 10,000+1250-1000 = 10,250 Pillows.

Hence, the Number of pillows to be produced is 10,250 Pillows.