Modesto Company produces and sells Product AlphaB. To guard against stockouts, the company requires that 20% of the next month’s sales be on hand at the end of each month. Budgeted sales of Product AlphaB over the next four months are:
Budgeted sales in units June 30,000, July 40,000, August 60,000, September 50,000.
Budgeted production for August would be:
a. 62,000 units
b. 70,000 units
Selected: c. 58,000 units This answer is correct.
d. 50,000 units
Correct! Units produced = Ending inventory 20 percent of 50,000 plus units sold of 60,000 less beginning inventory of 20 percent of 60,000 is 58,000.