Problem 6-21 Level production and related financing effects [LO3]

Bombs Away Video Games Corporation has forecasted the following monthly sales:

January	$	96,000	July	$	41,000
February		89,000	August		41,000
March		21,000	September		51,000
April		21,000	October		81,000
May		16,000	November		101,000
June		31,000	December		119,000
Total sales = $708,000

Bombs Away Video Games sells the popular Strafe and Capture video game. It sells for $5 per unit and costs $2 per unit to produce. A level production policy is followed. Each month's production is equal to annual sales (in units) divided by 12.

Of each month's sales, 20 percent are for cash and 80 percent are on account. All accounts receivable are collected in the month after the sale is made.

(a)	Construct a monthly production and inventory schedule in units. Beginning inventory in January is 21,000 units.

BOMBS AWAY VIDEO GAMES CORPORATION
Production and inventory schedule in units
	Beginning inventory	+	Production