Production Calculation for Sheridan Company

How many units must Sheridan Company produce?

A) 56000
B) 60000
C) 64000
D) 93000

Answer:

The company must produce 64,000 units to meet the sales target and maintain the desired ending finished goods inventory. The correct answer is 64,000 (Option C).

How is this so?

To determine the number of units the company must produce, we need to calculate the net increase in finished goods inventory.

Beginning finished goods: 29,000 units

Ending finished goods target: 33,000 units

Sales: 60,000 units

Net Increase = Ending finished goods target - Beginning finished goods + Sales

= 33,000 - 29,000 + 60,000

= 4,000 + 60,000

= 64,000 units

Thus, it is correct to state that the company must produce 64,000 units to meet the sales target and maintain the desired ending finished goods inventory. The correct answer is 64,000.