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A manufacturing company expects to sell 12,000 units in August and 15,000 units in September. The company desires to have an ending inventory of 80% of the next month's sales. If inventory on August 1 is 8,000 units, then the company should produce _________units in August.

Answer :

Answer:

16,000

Explanation:

The amount of inventory to be produced is dependent on the projected sales, the expected opening and ending balances.

If the company desires to have an ending inventory of 80% of the next month's sales. It means that the ending inventory for August

= 80% × 15,000

= 12,000 units

Let the units to be produced in August be G, then;

8000 + G - 12000 = 12000

G = 12000 + 12000 - 8000

= 16000 units

The company should produce 16,000 units in August.

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