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Aloan Co. provides the following sales forecast for the next three months:Sales units: January: 3,000 February: 4,200 March: 5,000The compnay wants to end each month with the ending finished goods invetory equal to 10% of the next month's sales. Finished goods inventory on December 31 is 300 units. The budgeted production units for February are?

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Answer:

The budgeted production units for February are 4,400.

Explanation:

Prepare a Production Budget for February as follows :

                                                                                    units

Budgeted Sales                                                        4,200

Add Budgeted Closing Stock (5,000 × 10%)             500

Total Production Needed                                        4,700

Less Budgeted Opening Stock (3,000 × 10%)         (300)

Budgeted Production                                               4,400

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