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Walsh Company expects sales of Product W to be 60,000 units in April, 75,000 units in May and 70,000 units in June. The company desires that the inventory on hand at the end of each month be equal to 40% of the next month's expected unit sales. Due to excessive production during March, on March 31 there were 25,000 units of Product W in the ending inventory. Given this information, Walsh Company's production of Product W for the month of April should be:
a. 60,000 units
b. 65,000 units
c. 75,000 units
d. 66,000 units

Respuesta :

Answer:

b. 65,000 units

Explanation:

The computation of the budgeted production in April month is shown below:

= Sale units + ending inventory units - beginning inventory units

where,  

Sale units is 60,000 units

Ending inventory units = 75,000 units × 40% = 30,000 units

Beginning inventory units = 25,000 units

Now put these units to the above formula  

So, the units would equal to  

= 60,000 units + 30,000 units - 25,000 units

= 65,000 units

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