Coleman, Inc. anticipates sales of 50,000 units, 48,000 units, and 51,000 units in July, August, and September, respectively. Company policy

Coleman, Inc. anticipates sales of 50,000 units, 48,000 units, and 51,000 units in July, August, and September, respectively. Company policy is to maintain an ending finished-goods inventory equal to 40% of the following month’s sales. On the basis of this information, how many units would the company plan to produce in August?
A. 48,000
B. 49,200
C. 49,800
D. 50,600
E. Some other amount.

0 thoughts on “Coleman, Inc. anticipates sales of 50,000 units, 48,000 units, and 51,000 units in July, August, and September, respectively. Company policy”

  1. Inventory management is a significant part of any organization along with proper management of records can help firms earn profits. Thus, the company needs to produce 49,200 units for the month of August.

    What is Inventory Management?

    Inventory management refers to the process of ordering, storing, using, and selling a company’s inventory. This includes the handling of raw materials, parts, and finished products, as well as the storage and processing of such items.

    As per the given information, the company’s policy is to maintain an ending finished goods inventory equal to 40% of the following month’s sales.

    Hence, the calculation further for Inventory production for August are given below:

    [tex]\rm\,Ending\,finished\, goods \,inventory = (40\%\, of\, following\, month \,sales)\\[/tex]

    [tex]\rm\\Ending\, Inventory\, of \,August = 40\% \,of\, September\\\\rm\,Total\,Number \,of \,Units\, for\, the\, Month \,of\, August = Sales + Ending Inventory of August\\\\\rm\,Total\,Number \,of \,Units\, for\, the\, Month \,of\, August = 48,000 + (40\% of 51,000)\\\\rm\,Total\,Number \,of \,Units\, for\, the\, Month \,of\, August = 68,400 \,Units.[/tex]

    The beginning inventory for the month of August will be the ending inventory of July, therefore that has to be deducted to know the actual number of units of goods to be produced for the month of August:

    [tex]\rm\,Ending\,Finished\, Goods \,Inventory = (40\%\, of\, following\, Month \,Sales)\\\\\\Ending\, Inventory \, of \, July = 40\% \, of \, August \, Sales\\\\Ending \, Inventory \, of \, July \, = 40\% \, of \, 48,000\\\\\Ending \, Inventory\, of\, July = 19,200 \, Units.\\[/tex]

    [tex]\rm\,Total\,Number \,of \,Units\, for\, the\, Month \,of\, August = Total \,Units \, of \, Goods\, to\, be\, Produced – Beginning \, Inventory \, of \, August\\\\\\rm\,Total\,Number \,of \,Units\, for\, the\, Month \,of\, August = 64,400 – 19,200\\\\Total\,Number \,of \,Units\, for\, the\, Month \,of\, August = 49,200 \,Units[/tex]

    Hence, Option B. 49,200 is the correct answer.

    To learn more about Inventory Management, refer to the link:

    https://brainly.com/question/4310633

    Reply
  2. Answer:

    option (B) 49,200

    Explanation:

    Data provided in the question:

    Sales     50,000 units       48,000 units     51,000 units

    Month      July                     August              September

    Ending finished-goods inventory = 40% of the following month’s sales

    Thus,

    Total number of units required in August

    = sales + Ending inventory

    = 48,000 units + ( 40% of sales in September )

    = 48,000 units + ( 0.40 × 51,000 )

    = 48,000 units + 20,400 units

    = 68,400 units

    Beginning inventory of August = Ending inventory of July

    = 40% of sales in August

    = 0.40 × 48,000

    = 19,200 units

    Therefore,

    Units to be produced in August

    = Total number of units required in August  – Beginning inventory of August

    = 68,400 units – 19,200 units

    = 49,200 units

    Hence,

    Answer is option (B) 49,200

    Reply

Leave a Comment

one + nine =