Production Calculation for Sheridan Company
How many units must Sheridan Company produce?
A) 56000
B) 60000
C) 64000
D) 93000
Answer:
The company must produce 64,000 units to meet the sales target and maintain the desired ending finished goods inventory. The correct answer is 64,000 (Option C).
How is this so?
To determine the number of units the company must produce, we need to calculate the net increase in finished goods inventory.
Beginning finished goods: 29,000 units
Ending finished goods target: 33,000 units
Sales: 60,000 units
Net Increase = Ending finished goods target - Beginning finished goods + Sales
= 33,000 - 29,000 + 60,000
= 4,000 + 60,000
= 64,000 units
Thus, it is correct to state that the company must produce 64,000 units to meet the sales target and maintain the desired ending finished goods inventory. The correct answer is 64,000.