Problem 6-5 Level versus seasonal production (LO6-1) Antonio Banderos & Scarves makes headwear that is very popular in the fall-winter season. Units sold are anticipated as follows: Monthly Unit Sales October 2,000 3,000 December 6,000 January 16,000 Total units sold November 5,000 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 16,000 items over four months at a level of 4,000 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. October November December January Ending Inventory units units units units b. If the inventory costs $5 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 October November December January Total financing cost $ 0