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### Knowledge Check 03
**Given:**  
- Beginning inventory: 20,000 bottles  
- Sales estimates for the first quarter: 200,000 bottles  
- Ending inventory desired: 10% of the next quarter's (second quarter's) sales  
- Second quarter's sales estimate: 150,000 bottles  

**Steps to find the production needed for the first quarter:**
1. **Calculate the desired ending inventory for the first quarter:**  
   \( 10\% \text{ of } 150,000 = 15,000 \text{ bottles} \)

2. **Total bottles needed for the first quarter:**  
   \( 200,000 \text{ (sales)} + 15,000 \text{ (ending inventory)} = 215,000 \text{ bottles} \)

3. **Subtract the beginning inventory to find the production requirement:**  
   \( 215,000 - 20,000 = 195,000 \text{ bottles} \)

**Answer:** The production needs for the first quarter are **195,000 bottles**.

### Knowledge Check 04
**Given:**  
- Ending inventory desired: 10% of the third quarter's sales  
- Third quarter's sales estimate: 250,000 bottles  

**Calculate the desired ending inventory for the second quarter:**  
\( 10\% \text{ of } 250,000 = 25,000 \text{ bottles} \)

**Answer:** The desired ending inventory for the second quarter is **25,000 bottles**.

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### Related Questions:
1. How would the production needs change if the beginning inventory was different?
2. What if the company wanted a higher or lower percentage of the subsequent quarter's sales as ending inventory?
3. How do changes in sales estimates impact production planning?
4. What is the importance of keeping an adequate ending inventory level?
5. How can inventory management strategies affect a company's financial health?

**Tip:** In production planning, always account for potential changes in sales forecasts and adjust inventory levels accordingly to avoid stockouts or excess inventory.

Vineyard Corporation, a manufacturer of fine wines, began the year with 20,000 bottles in inventory. The company estimated the budgeted sales for the four quarters of the current year to be 200,000 bottles, 150,000 bottles, 250,000 bottles, and 400,000 bottles, respectively. The management feels that an ending inventory of 10% of the subsequent quarter's sales is appropriate. What are the production needs for the first quarter? What is the desired ending inventory for the second quarter?

Learn how to calculate the production needs for Vineyard Corporation's first quarter, accounting for beginning and ending inventory levels. This problem involves key inventory management and production planning concepts, including calculating ending inventory as 10% of subsequent quarter's sales. Suitable for business and finance students.

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