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The forecasted sales pertain to Arrow Corporation: Month Sales September $400,000 October 320,000 Finished Goods Inventory (August 31): 28,000 Arrow Corporation has a selling price of $5 on all units and expects to maintain ending inventories equal to 25 percent of the next month's sales. How many units does Arrow expect to produce in September

Sagot :

Answer:

68,000 units

Explanation:

The computation of the number of units that produced in september is given below;

The sales units at September is

= $400,000 ÷ 5

= 80,000 units

And, the october sales units is

= $320,000 ÷ 5

= 64,000 units

So, the production should be

= Ending finished units + sales units - beginning finished units

= (25% of 64,000 units)  + 80,000 units - 28,000 units

= 16,000 units + 80,000 units - 28,000 units

= 68,000 units

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