13. (TCO 7) A company budgeted unit sales of 102,000 units for January, 2008 and

Question

13. (TCO 7) A company budgeted unit sales of 102,000 units for January, 2008 and 120,000 units for February, 2008. The company has a policy of having an inventory of units on hand at the end of each month equal to 30% of next month's budgeted unit sales. If there were 30,600 units of inventory on hand on December 31, 2007, how many units should be produced in January, 2008 in order for the company to meet its goals? (Points:5 107,400 units 102,000 units 96,600 units 138,000 units 14. (TCO 8) Standards that are based on efficient activity with allowances for unavoidable losses are called (Points : 5) -- basic standards. maximum efficiency standards. currently attainable standards. expected standards.

Explanation / Answer

13. Units To be Produced in January 2008 to meet Gols

= No of units to be sold in January 2008 Less Opening Inventory Add Closing Inventory i,e 30% february sales unit

= 102,000 - 30600 + 30% of 120,000

= 71,400+36000

= 107400 units to be produced to meet gols

14. Standards that are based on efficient activity with allowances for unavoidable losses are called Maximum Efficiency standards. Because it will provide the maximum output at all possible allowable level of loss which will result in to the maxmium efficiency that can be getable at the given unavoidable losses.

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