Can someone please help me with this question. Its out of B2 for Becker. My issue is in the answer they are using 200,000 “production as there cogs formula, but I am stuck on this because they give you sales in units and my mentality is that the sales forecast of 180,000 should be in the BASE instead of the 200,000 because that's what actually sold. i'm lost on this part. Please Halp!
JacKue Co. plans to produce 200,000 pairs of roller skates during January of next year. Planned production for February is 250,000 pairs. Sales are forecasted at 180,000 pairs for January and 240,000 pairs for February. Each pair of roller skates has eight wheels. JacKue's policy is to maintain 10% of the next month's production in inventory at the end of a month. How many wheels should JacKue purchase during January?
a.
195,000
b.
1,560,000
c.
205,000
d.
1,640,000
Explanation
Choice “d” is correct. JacKue should anticipate purchasing 1,640,000 wheels in January. JacKue would purchase enough wheels for 200,000 skates planned for production as adjusted for 20,000 already on hand in anticipation of January production plus 25,000 purchased in anticipation of February production as follows:
January production (skates)
200,000
Less beginning inventory (10% x 200,000)
(20,000)
Plus ending inventory (10% x 250,000)
25,000
January purchases
205,000
Wheels per skate
x 8
Total January purchases
1,640,000
.