At January 1, 2008, Ceatric, Inc. has beginning inventory of 2,000 surfboards. Ceatric estimates it will sell 5,000 units during the first quarter of 2008 with a 12% increase in sales each quarter. Ceatric's policy is to maintain an ending inventory equal to 25% of the next quarter's sales. Each surfboard costs $100 and is sold for $150. How much is budgeted sales revenue for the third quarter of 2008?

Question

Stanley Chung

Business

25 March, 20:10

At January 1, 2008, Ceatric, Inc. has beginning inventory of 2,000 surfboards. Ceatric estimates it will sell 5,000 units during the first quarter of 2008 with a 12% increase in sales each quarter. Ceatric's policy is to maintain an ending inventory equal to 25% of the next quarter's sales. Each surfboard costs $100 and is sold for $150. How much is budgeted sales revenue for the third quarter of 2008?

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Answers (1)

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Kaitlyn · Answer 1

Sales = $940,800

Explanation:

Giving the following information:

At January 1, 2008, Ceatric, Inc. has beginning inventory of 2,000 surfboards. Ceatric estimates it will sell 5,000 units during the first quarter of 2008 with a 12% increase in sales each quarter. Each surfboard costs $100 and is sold for $150.

First, we need to calculate the number of units sold in the third quarter:

1stQ = 5,000

2ndQ = 5,000*1.12 = 5,600

3rdQ = 5,600*1.12 = 6,272

Now, the sales revenue:

Sales = 6,272*150 = $940,800

Variable costs = 6,272*100 = (627,200)

Gross profit = $313,600