1. Lynndorf Corporation is a manufacturer of tables sold to schools, restaurants

Question

1.     Lynndorf Corporation is a manufacturer of tables sold to schools, restaurants, hotels, and other institutions. The table tops are manufactured by Lynndorf, but the table legs are purchased from an outside supplier. The Assembly Department takes a manufactured table top and attaches the four purchased table legs. It takes 20 minutes of labor to assemble a table. The company follows a policy of producing enough tables to insure that 40% of next month's sales are in the finished goods inventory. Lynndorf also purchases sufficient raw materials (legs) to insure that raw materials (legs) inventory is 60% of the following month's scheduled production needs. Lynndorf's sales budget in units for the next quarter is as follows:

July = 2,300

August = 2,500

September = 2,100

Lynndorf's ending inventories in units for June 30 are

Finished goods = 1,900

Raw materials (legs) = 4,000

The number of tables to be produced during August is:

1,400 tables

2,340 tables

1,900 tables

Explanation / Answer

number of tables = 2500 + (0.4 * 2100) - (0.4 * 2500) = 2340 tables

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