Accounting

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Sherman's interiors sells lamps. At March 31, the company had 400 sofas in inventory. The company's policy is to maintain a lamp inventory equal to 2% of next month's sales. The company expects the following sales activity for the second quarter of the year:

April----- 1,000 lamps
May------- 1,400 lamps
June------ 2,000 lamps

What is the projected production for May?

A.) 1,332 lamps
B.) 1,468 lamps
C.) 1,388 lamps
D.) 1,412 lamps

The way I did it was I took 2% of June's sales (2000x2%) to get 40 and just added that to May's sales of 1400 to get 1440. That wasn't the answer though. Thanks for any help.

  • Accounting -

    Sorry guys. That part is supposed to say 400 lamps, not 400 sofas.

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