Question

Off-Line Co. has 9,000 units in beginning finished goods. The sales budget shows expected sales to be 36,000 units. If the production budget shows that 42,000 units are required for production, what was the desired ending finished goods?

Answer 1

Answer:

The desired endng inventory is 15000 units

Explanation:

The desired ending inventory will be equal to the closing inventory for this period after all the appropriate adjustments are made to the opening inventory.

Out of the 36000 units sales, 9000 units will be provided by the opening inventory. Thus the remaining units required for this period's sales are 36000 - 9000 = 27000 units.

Out of the 42000 units produced in this period, 27000 will be sold. Thus, the desired ending inbentory is 42000 - 27000 = 15000 units