Find the beginning inventory for April.
| | Beginning Inventory | Purchases | Units Sold |
|---|---|---|---|
| April | | 1,800 | 3,100 |
| May | 1,000 | 3,100 | 2,600 |
The ending inventory for April is the beginning inventory for May.
Answer (2)
Define variables: A b is the beginning inventory for April, and A e = 1000 is the ending inventory for April.
Use the formula: A e = A b + April Purchases − April Units Sold .
Substitute the given values: 1000 = A b + 1800 − 3100 .
Solve for A b : A b = 1000 − 1800 + 3100 = 2300 . The beginning inventory for April is 2300 .
Explanation
Understanding the Problem Let's analyze the given inventory data to find the beginning inventory for April. We know that the ending inventory for April becomes the beginning inventory for May. We can use this information to set up an equation and solve for the unknown.
Defining Variables and Relationships Let A b be the beginning inventory for April. Let A e be the ending inventory for April. Let M b be the beginning inventory for May. We are given that M b = 1000 . Since the ending inventory for April is the beginning inventory for May, we have A e = M b = 1000 .
Setting up the Equation We also know that the ending inventory for April can be calculated using the formula: A e = A b + April Purchases − April Units Sold .
From the table, we have April Purchases = 1,800 and April Units Sold = 3,100.
Substituting Values Substituting the known values into the equation, we get: 1000 = A b + 1800 − 3100 .
Solving for Beginning Inventory Now, we solve for A b :
A b = 1000 − 1800 + 3100 .
A b = 1000 + 1300 .
A b = 2300 .
Final Answer Therefore, the beginning inventory for April is 2300.
Examples
Understanding inventory management is crucial in business. For example, a store owner needs to track their inventory to ensure they have enough products to meet customer demand without overstocking. By using the formula: Ending Inventory = Beginning Inventory + Purchases - Units Sold, the store owner can determine the optimal level of inventory to maintain. This helps in making informed decisions about purchasing and pricing, ultimately maximizing profits and minimizing losses. This concept is also applicable in supply chain management, manufacturing, and even personal budgeting.
The beginning inventory for April is $2,300. This was calculated by using the formula for ending inventory, rearranging it, and substituting the given values. Understanding how to track inventory levels is crucial for effective business management.
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