Noel Enterprises Has Budgeted Sales in Units for the Next

Noel Enterprises has budgeted sales in units for the next five months as follows:
$\begin{array} {| l | r |} \hline \text { January } & 6,800 \text { units } \\\hline \text { February } & 5,400 \text { units } \\\hline \text { March } & 7,200 \text { units } \\\hline \text { April } & 4,600 \text { units } \\\hline \text { May } & 3,800 \text { units } \\\hline\end{array}$ Past experience has shown that the ending inventory for each month must be equal to 10% of the next month's sales in units. The inventory on December 31 contained 400 units. The company needs to prepare a production budget for the second quarter of the year.


-What is the desired ending inventory for March?

A) 380 units.
B) 460 units.
C) 540 units.
D) 720 units.

Correct Answer:

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