A. Nico’s Sports Manufacturing sells baseball gloves. December 2017 sales were 1

Question

A. Nico’s Sports Manufacturing sells baseball gloves. December 2017 sales were 100,000 gloves @ $30 per unit, for a total sales of $3,000,000. The marketing department expect sales to increase by 1% in January 2108, another 1% in February 2018 and March 2018 sales are budgeted to be 500 gloves more than February.

1. Calculate the projected sales in January 2018

2. Calculate the projected sales in March 2018

3. Calculate the projected sales in the 1st quarter of 2018 (Jan – March)

Nico’s inventory policy is to maintain an ending inventory equal to 20% of the next month budgeted sales. Budgeted sales for April 2018 are 103,000 units. December 2017 ending inventory was 30,000 units.

4. Calculate required units of available production for March 2018

5. Calculate units to be produced for February 2018

6. Calculate units to be produced for the 1st quarter of 2018

Explanation / Answer

1. Calculate the projected sales in January 2018

Projected sales in january = 100000*101%*30 = 30,30,000

2. Calculate the projected sales in March 2018

Projected sales in march = (100000*101%*101%)+500*30 = 30,75,300

3. Calculate the projected sales in the 1st quarter of 2018 (Jan – March)

4. Calculate required units of available production for March 2018

Production march = Sals in march+ending inventory in march-beginning inventory

= (100000*101%*101%+500)+(103000*20%)-(100000*101%*101%+500*20%)

Production march = 102608 units

5. Calculate units to be produced for February 2018

Production feb = Sals in feb+ending inventory in march-beginning inventory

= (100000*101%*101%)+20502-(100000*101%*101%*20%)

Production feb = 102110

6. Calculate units to be produced for the 1st quarter of 2018

Month Sales January 30,30,000 February (100000*101%*101%)*30 30,60,300 March 30,75,300 Total 91,65,600

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