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: October 1,600 November 2,600 December 5,200 January 4,200 13,600 units 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 13,600 items over four months at a level of 3,400 per month. a. 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.) Ending Inventory October units November units December units January units b. If the inventory costs $5 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.)

Explanation / Answer

b)

**monthly rate =12/12=1%

Oct Nov Dec Jan Beginning 0 1800 2600 800 Units produced 3400 3400 3400 3400 less:units sold -1600 -2600 -5200 -4200 Ending inventory 1800 2600 800 0

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