Choice "A" is correct. Required production can be calculated from a normal Account Analysis Format, where production takes the place of purchases, sales takes the place of cost of goods sold, and everything is expressed in units (not dollars). Beginning and ending inventory are given in the question. The calculation is as follows:
Beginning inventory | 85 |
Add: Production | "plug" |
Subtract: Sales | (1,000) |
Ending inventory | 100 |
The plug for production is thus 1,015 units.Choice "b" is incorrect. This answer appears to use the prior-year beginning inventory (200 units) in place of, and instead of, the ending inventory (100 units). The "plug" will then be 100 units less.
Choice "c" is incorrect. This answer appears to add the sales (1,000 units) and the ending inventory (100 units) and to ignore the beginning inventory.Choice "d" is incorrect. This answer appears to add the prior-year beginning inventory (200 units) to the ending inventory (100 units). The "plug" will then be 200 units more.