Question

Frolic Corporation has budgeted sales and production over the next quarter as follow: July August September...

Frolic Corporation has budgeted sales and production over the next quarter as follow:

July August September
Sales in Units 50,000 62,000 ??????
Production in units    71,200 62,300 66,650

The company has 6,000 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 81,500 units.

Required:

Prepare the Budgeted sales for September in units. Please show process.

Business   Accounting   
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Answer #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 81,500 units.

Ending inventory of September = 10% of sales of October

= 81,500 x 10%

= 8,150

Ending inventory of July = 10% of sales of August

= 62,000 x 10%

= 6,200

Ending inventory of July will be the beginning inventory of August

August Sales units = Beginning inventory of August + Production in August - Ending inventory of August

62,000 = 6,200 + 62,300 - Ending inventory of August

Ending inventory of August = 6,500 units

Ending inventory of August will be the beginning inventory of September

September Sales units = Beginning inventory of September + Production in September - Ending inventory of September

= 6,500 + 66,650 - 8,150

= 65,000

Please ask if you have any query related to the question. Thank you

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