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Production units

Company A information:
Forecasted sales for 1st quarter $200,000
Forecasted sales for 2nd quarter 250,000
Cash sales = 10% of total sales

Collection schedule:
In quarter sold 75%
In next quarter 25%

Company A forecasts sales for the third quarter at 10,000 units. The desired ending inventory for the second quarter is 2,000 units and for the third quarter is 3,000 units. How many units must be produced in the third quarter?

Solution Preview

The beginning finished good is the ending inventory for the second quarter is 2000 units:

Hence units to produce= Unit sales+Desired ending finished ...

Solution Summary

This explains the method to compute production units with the help of an example