91Ó°ÊÓ

Esquire Products Inc. expects the following monthly sales:

January	\(28,000
February	\)19,000
March	\(12,000
April	\)14,000
May	\(8,000
June	\)6,000
July	\(22,000
August	\)26,000
September	\(29,000
October	\)34,000
November	\(42,000
December	\)24,000
Total annual sales	\(264,000

Cash sales are 40 percent in a given month, with the remainder going into accounts receivable. All receivables are collected in the month following the sale. Esquire sells all of its goods for \)2 each and produces them for $1 each. Esquire uses level production, and average monthly production is equal to annual production divided by 12.

a. Generate a monthly production and inventory schedule in units. Beginning inventory in January is 12,000 units. (Note: To do part a, you should work in terms of units of production and units of sales.)

Step by step solution

01

Required computations

1. $\begin{array}{rcl}\mathit{U}\mathit{n}\mathit{i}\mathit{t}\mathit{s}\mathbf{}\mathit{p}\mathit{r}\mathit{o}\mathit{d}\mathit{u}\mathit{c}\mathit{e}\mathit{d}& \mathbf{=}& \frac{\mathbf{T}\mathbf{o}\mathbf{t}\mathbf{a}\mathbf{l}\mathbf{}\mathbf{a}\mathbf{n}\mathbf{n}\mathbf{u}\mathbf{a}\mathbf{l}\mathbf{}\mathbf{s}\mathbf{a}\mathbf{l}\mathbf{e}\mathbf{s}}{\mathbf{P}\mathbf{r}\mathbf{i}\mathbf{c}\mathbf{e}\mathbf{}\mathbf{p}\mathbf{e}\mathbf{r}\mathbf{}\mathbf{u}\mathbf{n}\mathbf{i}\mathbf{t}\mathbf{s}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{264}\mathbf{,}\mathbf{000}}{\mathbf{2}}\\ & \mathbf{=}& \mathbf{132}\mathbf{,}\mathbf{000}\mathbf{}\mathit{u}\mathit{n}\mathit{i}\mathit{t}\mathit{s}\end{array}$

2. $\begin{array}{rcl}\mathit{M}\mathit{o}\mathit{n}\mathit{t}\mathit{h}\mathit{l}\mathit{y}\mathbf{}\mathit{u}\mathit{n}\mathit{i}\mathit{t}\mathit{s}\mathbf{}\mathit{p}\mathit{r}\mathit{o}\mathit{d}\mathit{u}\mathit{c}\mathit{e}\mathit{d}& \mathbf{=}& \frac{\mathbf{T}\mathbf{o}\mathbf{t}\mathbf{a}\mathbf{l}\mathbf{}\mathbf{n}\mathbf{u}\mathbf{m}\mathbf{b}\mathbf{e}\mathbf{r}\mathbf{}\mathbf{o}\mathbf{f}\mathbf{}\mathbf{u}\mathbf{n}\mathbf{i}\mathbf{t}\mathbf{s}\mathbf{}\mathbf{p}\mathbf{r}\mathbf{o}\mathbf{d}\mathbf{u}\mathbf{c}\mathbf{e}\mathbf{d}\mathbf{}\mathbf{i}\mathbf{n}\mathbf{}\mathbf{a}\mathbf{}\mathbf{y}\mathbf{e}\mathbf{a}\mathbf{r}}{\mathbf{N}\mathbf{u}\mathbf{m}\mathbf{b}\mathbf{e}\mathbf{r}\mathbf{}\mathbf{o}\mathbf{f}\mathbf{}\mathbf{m}\mathbf{o}\mathbf{n}\mathbf{t}\mathbf{h}\mathbf{s}}\\ & \mathbf{=}& \frac{\mathbf{132}\mathbf{,}\mathbf{000}}{\mathbf{12}}\\ & \mathbf{=}& \mathbf{11}\mathbf{,}\mathbf{000}\mathbf{}\mathit{u}\mathit{n}\mathit{i}\mathit{t}\mathit{s}\end{array}$

3. $\mathit{N}\mathit{u}\mathit{m}\mathit{b}\mathit{e}\mathit{r}\mathbf{}\mathit{o}\mathit{f}\mathbf{}\mathit{u}\mathit{n}\mathit{i}\mathit{t}\mathit{s}\mathbf{}\mathit{s}\mathit{o}\mathit{l}\mathit{d}\mathbf{=}\frac{\mathbf{M}\mathbf{o}\mathbf{n}\mathbf{t}\mathbf{h}\mathbf{l}\mathbf{y}\mathbf{}\mathbf{s}\mathbf{a}\mathbf{l}\mathbf{e}\mathbf{s}}{\mathbf{\$}\mathbf{2}}$

4.$\mathit{E}\mathit{n}\mathit{d}\mathit{i}\mathit{n}\mathit{g}\mathbf{}\mathit{i}\mathit{n}\mathit{v}\mathit{e}\mathit{n}\mathit{t}\mathit{o}\mathit{r}\mathit{y}\mathbf{=}\mathit{B}\mathit{e}\mathit{g}\mathit{i}\mathit{n}\mathit{n}\mathit{i}\mathit{n}\mathit{g}\mathbf{}\mathit{i}\mathit{n}\mathit{v}\mathit{e}\mathit{n}\mathit{t}\mathit{o}\mathit{r}\mathit{y}\mathbf{+}\mathit{P}\mathit{r}\mathit{o}\mathit{d}\mathit{u}\mathit{c}\mathit{t}\mathit{i}\mathit{o}\mathit{n}\mathbf{-}\mathit{S}\mathit{a}\mathit{l}\mathit{e}\mathit{s}$

02

Production and inventory schedule

Month	Beginning inventory	Production	Sales	Ending inventory
January	12,000	11,000	14,000	9,000
February	9,000	11,000	9,500	10,500
March	10,500	11,000	6,000	15,500
April	15,500	11,000	7,000	19,500
May	19,500	11,000	4,000	26,500
June	26,500	11,000	3,000	34,500
July	34,500	11,000	11,000	34,500
August	34,500	11,000	13,000	32,500
September	32,500	11,000	14,500	29,000
October	29,000	11,000	17,500	23,000
November	23,000	11,000	21,000	13,000
December	13,000	11,000	12,000	12,000

Unlock Step-by-Step Solutions & Ace Your Exams!

• Full Textbook Solutions

  Get detailed explanations and key concepts

• Unlimited Al creation

  Al flashcards, explanations, exams and more...

• Ads-free access

  To over 500 millions flashcards

• Money-back guarantee

  We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91Ó°ÊÓ!