Roose manufactures a product called Wye. The owners of Roose are preparing the budgets for the three months ending December 2020. Expected sales in units are shown below.
October 2020
November 2020
December 2020
January 2021
Units of Wye
5,700 units
6,080 units
6,384 units
4,788 units
One completed Wye contains 3.40 kg of material, costing RM 9.30 per kg.
Inventory as at 1 Oct 2020
Inventory decision
Finished product (units) of Wye
1,425 units
Closing inventory in any month should represent
25% of the next month’s expected sales
Material (kg)
25,000 kg
This is to be reduced at a constant rate to 16, 000 kg by the end of December 2020
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