Question

has budgeted sales and production over the next quarter as follows: July August September Sales in...

has budgeted sales and production over the next quarter as follows:

July August September
Sales in units 46,000 58,000 ?
Production in units 46,600 58,300 62,650

The company has 5,200 units of product on hand at July 1. 10% of the next month's sales in units should be on hand at the end of each month. October sales are expected to be 77,500 units. Budgeted sales for September would be (in units):

Multiple Choice

  • 68,450

  • 61,000

  • 70,000

  • 70,400

Business   Accounting   
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Answer #1

Answer : 61,000

Opening units in July 1 are 5200

Closing units in July = opening units + production during July - sales in July

= 5,200 + 46,600 - 46,000

= 5,800

Which is equal to 10% of next Month sales

Next Month (August) sales are 58,000

Opening units in August is 5,800 units ( closing units of July)

Closing units in August = opening units + production during August - sales during August

= 5,800 + 58,300 - 58,000

= 6100 units

It is given that 10% of next Month sales in units should be on hand at the end of Each month

August month closing units = 6,100 units

September month sales = 6,100/10%

= 61,000 units

Verification:

Sales in September month = opening units of September + production during September - closing units of September

= 6,100 + 62,650 - 7,750 ( 10%×77,500)

= 61,000 units

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