Dido Co.’s finished goods inventory policy is to hold enough inventory at the en
ID: 2540986 • Letter: D
Question
Dido Co.’s finished goods inventory policy is to hold enough inventory at the end of the month to meet 20% of next month’s sales requirements. The cost and selling price of each unit of inventory is $23 and $28, respectively.
Dido’s budgeted sales (in units) for the months June through September 20x1 is as follows:
June
7973
July
5306
August
10205
September
2378
What is Dido’s budgeted production (in dollars) for the month of August 20x1?
Select one:
a. $198711
b. $241909
c. $8640
d. $245654
June
7973
July
5306
August
10205
September
2378
Explanation / Answer
Value of Finished goods required in August 20x1
10 205 units * $23
Add : Ending Inventory [ ie 20 % of Sept’s sales]
(2,378 units * 20 %) * $23
Less : Beginning Inventory [ ie 20 % of Aug’s sales or ending inventory of July ]
(10 205 units * 20 %) * $23
Value of Finished goods required in August 20x1
10 205 units * $23
$234,715Add : Ending Inventory [ ie 20 % of Sept’s sales]
(2,378 units * 20 %) * $23
$10,939Less : Beginning Inventory [ ie 20 % of Aug’s sales or ending inventory of July ]
(10 205 units * 20 %) * $23
$46,943 Dido’s budgeted production (in dollars) for the month of August 20x1 $198,711 (ie option a)Related Questions
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