What would be the budgeted inventory for March 31st?A. 46,000B. 36,000C. Cannot be determined from the data givenD. 42,000  The Cardinal Co. had a finished goods inventory of 55,000 units on...

What would be the budgeted inventory for March 31st?
A. 46,000
B. 36,000
C. Cannot be determined from the data given
D. 42,000

 

The Cardinal Co. had a finished goods inventory of 55,000 units on January1. Its projected sales for the next four months were: January-200,000 units; February-180,000 units; March-210,000 units; and April-230,000 units. The Cardinal Co. wishes to maintain a desired ending finished goods inventory of 20% of the following months sales.

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justaguide | College Teacher | (Level 2) Distinguished Educator

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The Cardinal Co. has a policy of maintaining inventory equal to 20% of the next month's estimated sales. According to the information provided, the estimated sales for January are 200,000 units; for February they are 180,000 units; for March 210,000 units and for April it is 230,000 units.

As per the company's policy the finished goods inventory on March 31st should be 20% of the estimated sales for the next month which is April. In April 230,000 units are estimated to be sold.

This gives the required inventory as 20% of 230,000 = 0.2*230000 = 46000

The right option is A. The budgeted inventory for March 31st is 46000.

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