Omega Enterprises budgeted the following sales in units: January 40,000
February 30,000
March 50,000

Omega's policy is to have 30% of the following month's sales in inventory. On January 1, inventory equaled 8,000 units. February production in units is:

a, 20,000.
b. 26,500.
c. 40,000.
d. 36,000.
e. 28,000

d. 36,000

Explanation:

Given the following data,

Units;

February = 30,000

March = 50,000

In order to calculate February production in units, the sales for the month and the required ending inventory will be added together and then deduct the beginning inventory.

February Production in units ;

Sales for the month = 30,000

Ending inventory = [50,000 × 0.3] = 15,000

Beginning inventory = [30,000 × 0.3] = [9,000]

Total = 36,000 units.

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