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5 February, 06:37

The sales budget for Modesto Corp. shows that 21,700 units of Product A and 23,700 units of Product B are going to be sold for prices of $11.70 and $13.70, respectively. The desired ending inventory of Product A is 10% higher than its beginning inventory of 3,700 units. The beginning inventory of Product B is 4,200 units. The desired ending inventory of B is 4,700 units. Budgeted purchases of Product A for the year would be:

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  1. 5 February, 06:39
    0
    The budgeted purchases for product A is 22,070 units

    Explanation:

    The budgeted purchases for product A can be computed by adding sales to closing inventory, then deducting opening inventory as shown below:

    Computation of Product A Purchases

    Budgeted sales 21,700

    Closing inventory (3700*110%) 4.070

    Opening inventory (3,700)

    Purchases 22,070

    Without mincing words, the budgeted purchases of product A is 22.070 units, which is $ 258,219 ($11.70*22,070) in value terms
  2. 5 February, 06:43
    0
    Budgeted purchase : 22,070 units

    Explanation:

    The purchases budget can be determined by adjusting he sales budget for closing an d opening inventory.

    The budgeted purchases product A cab be determined as follows

    =Sales + closing inventory - opening inventory

    Closing inventory of product A = 110% * 3,700 = 4070 units

    = 21,700 + 4070 - 3,700 = 22,070 units
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