Mr Lewis's Co Has Projected Sales for the Next Four

question 52

Multiple Choice

Mr Lewis's Co has projected sales for the next four months as follows: $\begin{array} { l c } & \underline { \text { Units } } \\\text { January } & 70,000 \\\text { February } & 90,000 \\\text { March } & 55,000 \\\text { April } & 65,000\end{array}$
Beginning inventory for the year is 47,000 units. Ending inventory for each month should be 30% of the next month's sales. How many units should the company produce in January?

• A) 50,000
• B) 97,000
• C) 70,000
• D) 90, 000

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Definitions:

Profit

The financial gain realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Loss

The negative result from operations or other transactions when costs and expenses exceed revenues.

Unit Product Cost

The total cost (including materials, labor, and overhead) to produce a single unit of product.

Absorption Costing

An accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed overhead - as part of the cost of a product.