Given the Projected Demands for the Next Six Months, Prepare $$\begin{array} { l l } \text { Month } & \text { Forecast } \\\hline 1 & 180 \\2 & 170 \\3 & 140 \\4 & 150 \\5 & 130 \\6 & 150\end{array}$$

question 32

Essay

Given the projected demands for the next six months, prepare an aggregate plan that uses inventory, regular time and overtime, and back orders. The plan must wind up with no units in ending inventory in period 6. Regular time capacity is 150 units per month. Overtime capacity is 20 units per month. Overtime cost is $30 per unit, back order cost is $20 per unit, inventory holding cost is $5 per unit, regular time cost is $20 per unit, and beginning inventory is zero. $$\begin{array} { l l } \text { Month } & \text { Forecast } \\\hline 1 & 180 \\2 & 170 \\3 & 140 \\4 & 150 \\5 & 130 \\6 & 150\end{array}$$

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Definitions:

Asset's Cost

The original financial value of an asset, including purchase price and any expenses incurred to get the asset ready for use.

Expired

Refers to resources or benefits that have been fully used and cannot contribute to future operations.

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenses to the period in which they actually occurred.

Prepaid Expenses

Costs that are paid for in advance and recorded as assets until they are used or consumed, at which point they become expenses.