Problem 6-6 Level versus seasonal production [LO1] Bambino Sporting Goods makes baseball gloves that are very popular in the spring and early summer season. Units sold are anticipated as follows: March 3,250 April 7,250 May 11,500 June 9,500 31,500 If seasonal production is used, it is assumed that inventory will directly match sales for each month and there will be no inventory buildup. The production manager thinks the preceding assumption is too optimistic and decides to go with level production to avoid being out of merchandise. He will produce the 31,500 units over 4 months at a level of 7,875 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. (Leave no cells blank - be certain to enter "0" wherever required.) b. If the inventory costs $12 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.) (Leave no cells blank - be certain to enter "0" wherever required.)
Input variables:
March unit sales	3,250	units
April unit sales	7,250	units
May unit sales	11,500	units
June unit sales	9,500	units
Total sales	31,500	units
Monthly level production units	7,875
b. Inventory cost per unit	$12
b. Interest rate	0.12	per year
Solution and Explanation:
a.
	Units sold	Units Produced	Change in Inventory	Ending Inventory
March
April
May
June
b.
	Ending Inventory	Inventory Cost	Financing Cost
October
November
December
January
Total