Antonio Banderos & Scarves makes headwear that is very popular in the fall-winter season. Units sold are anticipated as:

Monthly Unit Sales

October 1,700

November 2,700

December 5,400

January 4,400

14,200 Total units sold

If seasonal production is used, it is assumed that inventory will directly match sales for each month and there will be no inventory buildup. However, Antonio decides to go with level production to avoid being out of merchandise. He will produce the 14,200 items over four months at a level of 3,550 per month.

a. What is the ending inventory at the end of each month? Compare the unit sales to the units produced and keep a running total.

	Ending Inventory
March
April
May
June

b. If the inventory costs $4 per unit and will be financed at the bank at a cost of 12 percent, what is the monthly financing cost and the total for the four months? (Use 1 percent as the monthly rate.)

	Inventory Financing Cost
March
April
May
June
Total Financing Cost