ICAEW BIP · Chapter 7 · Question 1 of 10
Budgeted sales of a product are 18,000 units in quarter 1 and 20,000 units in quarter 2. Opening finished goods inventory for quarter 1 is 2,400 units, and closing inventory each quarter is to be 15% of the following quarter's budgeted sales. What is the production budget for quarter 1?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) 18,600 units
Explanation
Closing inventory = 15% x 20,000 = 3,000 units. Production = sales + closing inventory - opening inventory = 18,000 + 3,000 - 2,400 = 18,600 units.
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