What would the number of units expected to be manufactured in March be?
Production and sales estimates for March for the Robin Co. are as follows:
Estimated inventory (units), March 1: 18,000
Desired inventory (units), March 31: 20,300
Expected sales volume (units):
Area M: 7,000
Area L: 8,000
Area O: 9,000
The number of units expected to be manufactured in March is:
According to the production and sales estimates, the company has an estimated inventory of 18000 on March 1. They want to increase it and make it equal to 20300 by the end of March. The expected sales for the month of March are 7000 in Area M, 8000 in Area L and 9000 in Area O.
The total number of units to be manufactured in the month of March is equal to the sum of the total sales and the increase in inventory required.
This is equal to 7000 + 8000 + 9000 + ( 20300 - 18000)
=> 24000 + 2300
The correct number of units that have to be manufactured in March is 26300.
The company will need to manufacture 26,300 units in March.'
The reason for this is that this is the sum of the number of units that they plan to sell in March plus the amount that they wish to add to their inventory.
During the month, they plan to sell 24,000 units over the three areas that you mention. However, this is not how many they plan to manufacture. This is because they plan to have 2,300 more units in their inventory at the end of the month than they had at the beginning. Therefore, they need to produce 2,300 more units than they sell.
24,000 + 2,300 = 26,3000 and therefore the answer is D.