[mixluvchild84]

Vitale Hair Spray had sales of 8,000 units in March. A 50 percent increase is expected in April. The company will maintain 5 percent of expected unit sales for April in ending inventory. Beginning inventory for April was 400 units.

How many units should the company produce in April?

[pready]

First you have to calculate the sales for April. March sales of 8,000 units times 150% (100% + 50%).

Next you have to calculate ending inventory for the month of April. Take the abouve calculated number times 5%.

Now you have all the information to calculate the number of units to produce.
Beginning Inventory + Sales for the month less Ending Inventory = Number of Units to Produce.

[mixluvchild84]

Thank you... so do you always add 100% to the expected percentage increase? Is that always the formula for computing the sales? My book sucks and this is an online class

[pready]

Percenatages are based on 100% so if you have a 5% increase you will take your amount times 1 + 0.05, which is 1.05 or 105%.

This is the same as taking your amount times 5% then adding the two amounts together.

Take your problem for example if your sales were 8,000 and you have a 50% increase, your increase will be 4,000 units. 8,000 units + 4,000 units will be 12,000 units. But if you take 8,000 units times 150% or 1.05 you will come up with 12,000 units, which is a one step process, versus a 2 step process the other way.

You can use either method, which ever is the easiest for you to use.

If you have a decrease in percentage you will subtract the amount instead of adding the percentage. For an example you expect sales to decrease 5% you will take your actual sales for one year times 95%, which is 1 - 0.05 or 0.95 to get the estimated amount in one step or you could multiply your actual sales by the decrease in percentage then subtract this number from the actual sales to get your estimated sales, which will be a 2 step process.