Meadow Company produces hand tools. A sales budget for the next four months is as follows: March 10,000 units, April 13,000, May 16,000 and June 21,000. Meadow Company’s ending finished goods inventory policy is 10% of the following month’s sales. March 1 beginning inventory is projected to be 1,400 units. How many units will be produced in March?

Production= 9,900 units

Explanation:

Giving the following information:

Sales:

March 10,000 units

April 13,000 units

The desired ending finished goods inventory is 10% of the following month’s sales.

March 1 beginning inventory is projected to be 1,400 units.

To calculate the production for March, we need to use the following formula:

Production= sales + desired ending inventory - beginning inventory

Production= 10,000 + (13,000*0.1) - 1,400

Production= 9,900 units

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