ACCA MA · Chapter 10 · Question 2 of 11
Budgeted sales for May are 12,000 units, and for June 10,000 units. Opening finished goods inventory on 1 May is 1,500 units. Closing inventory each month is to be 20% of the next month's sales. What is the production budget for May?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) 12,500 units
Explanation
Closing inventory for May = 20% x 10,000 = 2,000 units. Production = sales + closing inventory - opening inventory = 12,000 + 2,000 - 1,500 = 12,500 units.
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