Next year's sales forecast shows that 20,000 units of Product A and 22,000 units of Product B are going to be sold for prices of $10 and $12 per unit, respectively. The desired ending inventory of Product A is 20% higher than its beginning inventory of 2,000 units. The beginning inventory of Product B is 2,500 units. The desired ending inventory of B is 3,000 units. Total budgeted sales of both products for the year would be:

Question

Quizplus · Accepted Answer

First, we need to calculate the desired ending inventory for Product A:

Desired Ending Inventory for A = Beginning Inventory for A x 1.2 = 2,000 x 1.2 = 2,400

Next, we need to calculate the total units of each product needed for the year:

Total A units = Beginning inventory + Sales forecast - Desired ending inventory 
Total A units = 2,000 + 20,000 - 2,400 = 19,600

Total B units = Beginning inventory + Sales forecast - Desired ending inventory 
Total B units = 2,500 + 22,000 - 3,000 = 21,500

Now we can calculate the total budgeted sales for both products:

Total budgeted sales = (Total A units x price per unit of A) + (Total B units x price per unit of B) 
Total budgeted sales = (19,600 x $10) + (21,500 x $12) 
Total budgeted sales = $196,000 + $258,000 
Total budgeted sales = $464,000

Therefore, the correct answer is D) $464,000.

Next Year's Sales Forecast Shows That 20,000 Units of Product