12960
14400
15840
16000
Answer is Right!
Answer is Wrong!
The correct answer is: A. 12960
To calculate the production budget, we first need to calculate the required production:
Required production = Budgeted sales + Desired ending inventory – Beginning inventory
Required production = 18000 + 11400 – 15000 = 14400 units
However, we know that 10% of the production units are scrapped as defective, so we need to adjust the required production for this:
Required production = 14400 * (1 – 0.1) = 12960 units
Therefore, the production budget for X for March is 12960 units.
Here is a brief explanation of each option:
- Option A: 12960 units. This is the correct answer. It is calculated by taking the budgeted sales of X for March (18000 units), adding the desired ending inventory (11400 units), and subtracting the beginning inventory (15000 units). This gives us the required production of 14400 units. However, we know that 10% of the production units are scrapped as defective, so we need to adjust the required production for this. This gives us the final production budget of 12960 units.
- Option B: 14400 units. This is the required production, but it does not take into account the fact that 10% of the production units are scrapped as defective. Therefore, this is not the correct answer.
- Option C: 15840 units. This is the production budget if there were no defective units. However, we know that 10% of the production units are scrapped as defective, so this is not the correct answer.
- Option D: 16000 units. This is the production budget if there were no defective units and the desired ending inventory was equal to the beginning inventory. However, we know that the desired ending inventory is 11400 units and the beginning inventory is 15000 units, so this is not the correct answer.