**Johnson Inc. Leather Inventory Management Problem**Johnson Inc. produces leather handbags. The company estimates it will use 4,100 square meters of leather in production in August and 4,500 square meters of leather in production in September. Johnson Inc.'s leather inventory policy is to maintain 40% of the next month’s production needs in inventory. Based on this policy, what will leather purchases be in August?**Options:**- 5,900 square meters- 4,100 square meters- 3,940 square meters- 4,260 square meters**Analyzing the Problem:**To determine the leather purchases for August, calculate the required ending inventory for August, which should cover 40% of September's production needs:September's production needs = 4,500 square meters Ending inventory for August = 40% of 4,500 = 1,800 square metersThe total leather needed for August includes both the production needs for August and this ending inventory:August production needs = 4,100 square metersTotal leather required in August = August production needs + Ending inventory for August = 4,100 + 1,800 = 5,900 square metersTherefore, Johnson Inc. should purchase **5,900 square meters** of leather in August.

The future purchases can be estimated using reliable data regarding past experiences and production…

Johnson Inc. produces leather handbags. Johnson Inc. estimates it will use 4,100 square meters of leather in production in August, and 4,500 square meters of leather in production in September. Johnson Inc.'s leather inventory policy is 40% of next month's production needs. What will leather purchases be in August? Multiple Choice 5,900 square meters 4,100 square meters 3,940 square meters 4,260 square meters

Johnson Inc. produces leather handbags. Johnson Inc. estimates it will use 4,100 square meters of leather in production in August, and 4,500 square meters of leather in production in September. Johnson Inc.'s leather inventory policy is 40% of next month's production needs. What will leather purchases be in August? Multiple Choice 5,900 square meters 4,100 square meters 3,940 square meters 4,260 square meters

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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