Antonio Banderos & Scarves makes headwear that is very popular in the fall-winte

Question

Antonio Banderos & Scarves makes headwear that is very popular in the fall-winter season. Units sold are anticipated as:

If seasonal production is used, it is assumed that inventory will directly match sales for each month and there will be no inventory buildup.

However, Antonio decides to go with level production to avoid being out of merchandise. He will produce the 11,500 items over four months at a level of 2,875 per month.

What is the ending inventory at the end of each month? Compare the unit sales to the units produced and keep a running total. (Leave no cells blank - be certain to enter "0" wherever required.)

If the inventory costs $8 per unit and will be financed at the bank at a cost of 12 percent, what is the monthly financing cost and the total for the four months? (Use 1 percent as the monthly rate.) (Leave no cells blank - be certain to enter "0" wherever required.)

Antonio Banderos & Scarves makes headwear that is very popular in the fall-winter season. Units sold are anticipated as:

Explanation / Answer

a)

b)

Particulars October November December January Beginning inventory (Last month's inventory will be the current month's inventory 0 1,625 2,250 625 Add: Units produced 2,875 2,875 2,875 2,875 Less: Units sold 1,250 2,250 4,500 3,500 Ending inventory 1,625 2,250 625 0

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