A Company Budgeted Unit Sales of 204,000 Units for January

question 91

Multiple Choice

A company budgeted unit sales of 204,000 units for January, 2020 and 240,000 units for February 2020. The company has a policy of having an inventory of units on hand at the end of each month equal to 30% of next month's budgeted unit sales. If there were 61,200 units of inventory on hand on December 31, 2019, how many units should be produced in January, 2020 in order for the company to meet its goals?

• A) 214,800 units
• B) 204,000 units
• C) 193,200 units
• D) 276,000 units

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Definitions:

Variable Overhead Costs

Expenses that fluctuate with production volume, such as utilities or raw materials, which are not directly linked to a specific unit of production.

Number of Guests

Refers to the count of individuals attending an event or accommodated by a service, such as in a hotel or restaurant.

Activity Variance

The difference between the planned activity and the actual activity level, which can affect budgeting and operations.

Revenue

The total amount of money generated by a company through its activities, often from sales of products or services.