(a) For each of the following, state three reasons why a firm may wish to keep:

(i) A minimum stock level of finished goods, and

(ii) An even level of production in the face of fluctuating demand.

(b) The sales forecast for Douglas & Co for July–December 20X7 is:

Produce a production budget showing monthly opening and closing stock figures if the firm wishes to maintain an even level of producing 300 units each month, and a minimum stock level of 150 units.

What must the opening stock be at 1 July to achieve this?

(c) Under what circumstances, in budgetary control, may a firm’s productive capacity prove to be its limiting or key factor?

Transcribed Image Text:

Units J 280 A 200 S 260 O 360 N 400 D 420