A manufacturing company always carries finished goods inventory level equal to 20% of the next month's budgeted sales.
Sales for the current month are 2000 units and are budgeted to be 20% higher next month.
How many units will be produced in the current month?
answer 2080 units
please help the calculation to get 2080 units, thank you
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budgeting - produced units
11y ago#1The closing inventory last month must be 20% of this months sales: 20% x 2000 = 400.
Next months sales are 2000 + 20% = 2400, so the closing inventory this month must be 20% x 2400 = 480
So the production this month is 2000 (sales) - 400 (opening inventory) + 480 closing inventory = 2080
thank you for the reply
11y ago#3You are welcome :-)
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