A Company Is Seeking to Develop a Master Production Schedule

question 30

Essay

A company is seeking to develop a master production schedule for its product. Their beginning inventory is 1000 units, and they want to maintain a safety stock level of 1000 units. They produce the product in a fixed lot size of 1200 units. Information regarding weekly demand is shown below:
$$\begin{array} { | l | l | l | l | l | l | l | } \hline \text { Week } & 1 & 2 & 3 & 4 & 5 & 6 \\\hline \text { Demand } & 1000 & 1100 & 1300 & 900 & 500 & 1000 \\\hline\end{array}$$
a.What is the ending inventory level for Week 2?
b.What is the production quantity for Week 4?

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Definitions:

Selling and Administrative Expense

Overheads related to the selling of products and the management of an organization.

Variable

An element, feature, or factor that is liable to vary or change.

Fixed

Pertains to expenses that remain constant for a given period regardless of the level of production or business activity.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials and labor.