Q:

Alta Vista Company plans to sell 90,000 units in June and 135,000 units in July. The company’s policy is to keep 15% of the next month's sales in ending inventory. If the ending inventory in May was consistent with this policy, how many units should be produced in June?

Accepted Solution

A:
Answer:96,750 units.Step-by-step explanation:Alta Vista Company plans to sell 90,000 units in June.Ending inventory in May equals to 15% of the next month's sale (90,000)Inventory having may ending = 15% × 90,000                                                  = 0.15 × 90,000                                                  = 13,500Inventory required to produce in June month = 90,000 - 13,500 + 15% of July month sales= 76,500 + 15% × 135,000= 76,500 + 20,250= 96,75096,750 units should be produced in June.