Cherboneau Novelties produces drink coasters (among many other products). During the current year (year 0), the company sold 539,000 units (packages of 6 coasters). In the coming year (year 1), the company expects to sell 578,000 units, and, in year 2, it expects to sell 852,000 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 21,500 units. Each unit requires 0.5 pound of cork. At the end of the current year, management expects to have 23,500 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.

Cherboneau Novelties produces drink coasters (among many other products). During the current year (year 0), the company sold 539,000 units (packages of 6 coasters). In the coming year (year 1), the company expects to sell 578,000 units, and, in year 2, it expects to sell 852,000 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 21,500 units. Each unit requires 0.5 pound of cork. At the end of the current year, management expects to have 23,500 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.

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

ChapterC: Cases

Section: Chapter Questions

Problem 1C

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