Kenner Company produces two products: SR200 and TX500. Budgeted sales for four months are as follows:
May 8,000 20,000
June 13,000 32,000
July 11,000 39,000
August 18,000 46,000
Kenner's ending inventory policy is that SR200 should have 15 percent of next month's sales in ending inventory and TX500 should have 40 percent of next month's sales in ending inventory. On May 1, there were 1,200 units of SR200 and 9,000 units of TX500.
TX500 requires 6 units of component A. (SR200 does not use component A.) There were 30,000 units of component A in inventory on May 1. Kenner wants to have 20 percent of the following month's production needs in inventory for Component A.
What is the desired ending inventory of component A for May?
In order to do this, you have to first plan production. See excel attached for steps.