Walsh Company expects sales of its exclusive Let it Raine Umbrella to be 60,000

Question

Walsh Company expects sales of its exclusive Let it Raine Umbrella to be 60,000 units in April, 75,000 units in May and 70,000 units in June. The company desires that the inventory on hand at the end of each month be equal to 40% of the next month's expected unit sales. Due to excessive production during March, on March 31 there were 25,250 units of Let it Raine Umbrellas in the ending inventory. Given this information, Walsh Company's production of Let it Raine Umbrellas for the month of April should be:

Select one:

a. 60,000 units

b. 65,000 units

c. 75,000 units

d. 64,750 units

Explanation / Answer

Production = Sales + Closing Inventory - Opening Inventory

Closing Inventory = 40% of next months' sale = 40% of 75000 = 30000

So, Production in April = 60000 + 30000 - 25250 = 64,750 units

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