Cherboneau Novelties produces drink coasters (among many other products). During the current year (year 0), the company sold 520,000 units (packages of 6 coasters). In the coming year (year 1), the company expects to sell 540,000 units, and, in year 2, it expects to sell 624,000 units. The target ending finished goods inventory for each month is equal to the next month's sales. However, because of production issues, the ending inventory in the current year is expected to be only 12,000 units.

Each unit requires 0.5 pounds of cork. At the end of the current year, management expects to have 18,750 pounds of cork in inventory. Management has set a target to have cork on hand equal to one-half of next month’s sales requirements. Sales and production take place evenly throughout the year.

Required:

a. Compute the total targeted production of the finished coaster for the coming year.

b. Compute the required amount of cork to be purchased for the coming year.

Answer rating: 100% (QA)

aYear 0 1 2 SalesSales expectedPkgof 6 coasters 520000 540000 624000 Add Desired ending inventory ... View the full answer