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13 October, 04:36

The sales budget for Modesto Corp. shows that 23,000 units of Product A and 25,000 units of Product B are going to be sold for prices of $9 and $11, respectively. The desired ending inventory of Product A is 20% higher than its beginning inventory of 2,300 units. The beginning inventory of Product B is 2,800 units. The desired ending inventory of B is 3,300 units. Total budgeted sales of both products for the year would be:

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  1. 13 October, 05:41
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    Total budgeted sales Product A $207,000

    Total budgeted sales Product B $ 275,000

    Total budgeted sales of both products for the year would be:$ 482,000

    Explanation:

    Modesto Corp

    Sales Budget

    Product A Product B

    Sales Units 23,000 25,000

    Sales Price $ 9 $ 11

    Total budgeted sales $207,000 $ 275,000

    WE multiply the units sales with the sale price to get the total budgeted sales.

    The desired inventory is required in the production budget not in the sales budget and is used as follows.

    Modesto Corp

    Production Budget

    Product A Product B

    Sales 23,000 25,000

    +Desired Ending

    Inventory 2760 3300

    - Beginning Inventory 2300 2800

    Budgeted Production 23460 25,500
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