Bambino Sporting Goods makes baseball gloves that are very popular in the spring

Question

Bambino Sporting Goods makes baseball gloves that are very popular in the spring and early summer season. Units sold are anticipated as follows:

  

  

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

The production manager thinks the preceding assumption is too optimistic and decides to go with level production to avoid being out of merchandise. He will produce the 30,900 units over four months at a level of 7,725 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 $16 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 1.0 percent as the monthly rate.) (Leave no cells blank - be certain to enter "0" wherever required.)

  

  March 3,150   April 7,150   May 11,300   June 9,300 30,900

Explanation / Answer

1) Calculation of closing inventory for all 4 months given :

2) Calculation of financing cost for all 4months :

Note: Assuming we are paying every month finance cost in the next month to the bank in the form of Installments.

Month Units March 4575units(7725-3150) April 5150units(4575+7725-7150) May 1575units(5150+7725-11300) June 0units(1575+7725-9300)

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