Question at position 27 [table]
The sales department of XenonX Enterprises has provided the following data so the production managers can develop a production budget for the 2nd quarter. The target end-of-month- inventory is 20% of the next month’s budgeted sales. If inventory at the end of March was 134 units, how many units will the company have to manufacture (Required Production in Units) in April in order to meet its target sales? | | | | | April | May | June | July Budgeted Sales in units | 670 | 720 | 830 | 770
[/table]Answer[table]
The sales department of XenonX Enterprises has provided the following data so the production managers can develop a production budget for the 2nd quarter. The target end-of-month- inventory is 20% of the next month’s budgeted sales. If inventory at the end of March was 134 units, how many units will the company have to manufacture (Required Production in Units) in April in order to meet its target sales? | | | | | April | May | June | July Budgeted Sales in units | 670 | 720 | 830 | 770
[/table][input]

Question

Question at position 27 [table]
The sales department of XenonX Enterprises has provided the following data so the production managers can develop a production budget for the 2nd quarter. The target end-of-month- inventory is 20% of the next month’s budgeted sales. If inventory at the end of March was 134 units, how many units will the company have to manufacture (Required Production in Units) in April in order to meet its target sales? |  |  |  |  | April | May | June | July Budgeted Sales in units | 670 | 720 | 830 | 770
[/table]Answer[table]
The sales department of XenonX Enterprises has provided the following data so the production managers can develop a production budget for the 2nd quarter. The target end-of-month- inventory is 20% of the next month’s budgeted sales. If inventory at the end of March was 134 units, how many units will the company have to manufacture (Required Production in Units) in April in order to meet its target sales? |  |  |  |  | April | May | June | July Budgeted Sales in units | 670 | 720 | 830 | 770
[/table][input]

BlackTom AI · Accepted Answer

Question restatement:
The XenonX Enterprises sales department provides budgeted sales for April, May, and June: 670, 720, 830 units respectively. The target end-of-month inventory is 20% of the next month’s budgeted sales. Beginning inventory at the end of March is 134 units. The task is to determine how many units must be manufactured in April (Required Production in Units) to meet April’s target sales and inventory levels.

Option analysis (since no multiple-choice options are given here, I will reason through the calculation and address a potential discrepancy in the provided answer):
- Step 1: Determine the desired ending inventory for April. By the rule, Ending Inventory (April) = 20% of May's budgeted sales = 0.20 × 720 = 144 units.
- Step 2: Identify beginning inventory for April. This is the ending inventory from March, which is given as 134 units.
- Step 3: Identify the budgeted sales for April. This is 670 units.
- Step 4: Use the production budgeting formula:
  Required Production in April = Budgeted Sales in April + Ending Inventory (April) − Beginning Inventory (April)
  = 670 + 144 − 134
  = 680 units.

Why this result is logical:
- We must cover April’s sales (670 units) and ensure we have enough inventory on hand at the end of April to meet May’s production needs (End-of-April Inventory = 144 units).
- We start with 134 units in beginning inventory (end of March). After producing some amount in April (the Required Production), the sum of April’s sales and the April-ending inventory must be supported by the beginning inventory plus production. The calculation 670 + 144 − 134 reflects exactly that balance.

Why 210 would be incorrect in this setup:
- If someone arrives at 210 as the required production, it would imply a much smaller need to cover April’s sales or a misinterpretation of the ending inventory target. For example, if you incorrectly used Ending Inventory = 20% of April’s sales (0.20 × 670 = 134) instead of 20% of May’s sales, the calculation would be 670 + 134 − 134 = 670, not 210. If you tried to subtract the beginning inventory twice or misapplied the formula, you could land on an erroneous figure like 210, but that does not align with the standard production budgeting equation.

Conclusion:
- Following the standard production budgeting logic with 20% of next month’s (May’s) budgeted sales as the ending inventory target yields a required production of 680 units for April. If the provided answer is 210, it appears to be inconsistent with the given data and the conventional budgeting method; the correct result given the data is 680 units.

Additional note:
- When encountering a discrepancy between the computed result and a listed answer, re-check the inventory target definition (whether it is 20% of the next month’s sales or of the current month’s sales) and verify that the beginning inventory is properly taken as the previous month’s ending inventory. In this problem, using 20% of May’s sales and a beginning inventory of 134 leads to 680 units of required production in April.

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