The sales budget for Modesto Corp. 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, 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. Budgeted purchases of Product A for the year would be:

Question

Quizplus · Accepted Answer

To find the budgeted purchases of Product A, we need to calculate the total units of Product A needed for the year, including the desired ending inventory.

Beginning inventory of Product A = 2,000 units
Desired ending inventory of Product A = 2,000 x 1.2 = 2,400 units
Total units of Product A needed = 20,000 + 2,400 = 22,400 units

Since 20,000 units of Product A are going to be sold, we need to subtract that from the total units needed to find the budgeted purchases of Product A:

Budgeted purchases of Product A = 22,400 - 20,000 = 2,400 units

Therefore, the answer is B, 20,400 units.

The Sales Budget for Modesto Corp