Based on the following production and sales estimates for May, determine the number of units expected to be manufactured in May.
Estimated inventory (units), May 1
20,000
Desired inventory (units), May 31
15,000
Expected sales volume (units):
South region
20,000
West region
40,000
North region
20,000
Unit sales price
$10
Answer
85,000
90,000
75,000
105,000
85,000
To determine the number of units expected to be manufactured in May, we need to consider the desired inventory, estimated inventory, and expected sales volume.
First, calculate the desired production level:
Desired Production = Desired Inventory - Estimated Inventory
Desired Production = 15,000 - 20,000
Desired Production = -5,000
Since the desired production level is negative, it means that there is excess inventory, and there is no need to manufacture any additional units in May.
Therefore, the number of units expected to be manufactured in May is 0.